It's Worse Than You Think
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.
Replies to This Discussion
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Permalink Reply by Arcus on -
If they were independent of each other then they shouldn't be counted together. However, there exists strong reasons why to double count them, specifically that the tax burden impacts both the value of a firm and the dividends its able to pay. As the double tax rate is considered relevant by the investor, its relevant for the calculation of total tax burden.
Lets say you start investing in property, and end up with 10 units that gross you $100k profit each year. You are considering whether to incorporate or not. If you don't you are taxed at your personal rate of 35%, thus you net $65k. If you incorporate you will first pay corporate tax of 35%, and then personal tax of 35% on dividends, thus you net $42.3k. Clearly you would choose to be personally liable, which will make you vulnerable and restrict your growth potential. I think that's quite relevant points and worthy of consideration.
The CEO wouldn't be liable anyway, unless he is also a shareholder. Auntie Marie with a few thousand dollars in shares through her 401-k, on the other, hand would be in the compromise you outlined.
While there certainly are possible to close loopholes, the average tax rate will almost always be lower than the corporate tax rate since general and tax accounting rules are different. Two large "loopholes" is that losses in one year count towards profit in another year, and depreciation is usually linear in the general accounting and percentage based (accelerated) in the tax accounting. That's not to say unnecessary loopholes don't exist and can't be closed, but a lower corporate tax in the US would make tax planning less profitable, and may in fact bring in more revenue. A sector tiered tax system would be even better, taxing extraction and domestic end-consumer companies at a substantially higher than those who face international competition.
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Permalink Reply by James Cox on -
I dislocated my shoulder several years ago, and had no insurance. I normally pushed the shoulder back into place, but this time even an 80lb tool box was not enough. A friend took we to the ER, I waited nearly 3 hours before I was seen, by then I was going into shock! Finally, I was wheeled in, they looked it over, they knocked me out, and I woke up a few hours latter with a re-located shoulder and a bill that seemed to indicate that I had been also raped! $1200.
For some reason they could not just use Demeral, which had always worked before, and I could stay conscious, they thought they needed to dope we up on a medication that interfers with short term memory!
Finally, I was able to get medical for a few months and had surgery for the shoulder, good ever since!
During the period I attempted to make payments, I was told by the billing department, after mentioning that the bill was absurd and no sane person should be stuck with it, that 'docters are wonderful, you should be happy that they put you back together!' In short, docters are F--king god, how dare you complain!
I hope, if this becomes a closer match to 'the best of all possible universes', that doctors get a 6 figure reality check! Thanks for being there, when I needed you!
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