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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I look at taxes going the other direction.  I have a farm in a society where people only eat turnips.  I pay $1/hr for people to pick turnips and I sell my turnips for $1/ea - wholesale, before shipping.

In that society, if you introduce a 20% tax on labour, I must now pay $1.25/hr in order for my workers to earn $1/hr.  This means that I must sell my turnips for $1.25/ea in order to maintain the same margins.

The trouble is that although my workers are now clearing $1/hr as before, turnips now cost them $1.25 - so they cannot afford to buy as many turnips as before the tax.  They want more money, but of course that would just drive up prices.  I am losing money because workers cannot afford as many turnips - so I am driven to lay off workers and demand that those remaining increase their production.

This scenario is only dealing with wholesale cost before shipping.  When you add in the multiple levels that it takes to get a product to market you find that the cost of typical consumer goods may well be more than 50% tax.

Labour tax is the most detrimental form of government revenue.

The problem comes when capital gains are taxed at 5% and labour earnings are taxed at 20% or more.

That's the golden rule, Heather. He who has the gold, makes the rules.

@Gallup

Thanks for that link - it was a great read.  It truly encapsulates the message that I want to get out to the general public.  Unfortunately at least 75% of our society lacks the literacy to understand such a message.

The government gets many bites at the apple and yet why are taxes so high?

Unseen, I'm guessing you're playing Devil's Advocate again. The US actually has one of the lowest overall tax rates in the world. And then there's the difference between the official and effective corporate tax rates, which respectively are 35% and as low as 0%, thanks to thousands of loopholes the corporations pay to have inserted in the US tax code.

"The problem comes when capital gains are taxed at 5% and labour earnings are taxed at 20% or more."

Talking US numbers, the 5% was only for individuals earning less than $36k and which wasn't from "speculation". For the vast majority, capital gains (excl. dividends, which counts as income) will be taxed at 18/20%. As corporations in the US is taxed at 35%, the technical tax rate is thus 52%/53.3%.

Taxes have the effect of discouraging whatever is taxed (technically speaking, it distorts the behavior of market actors). Every tax is a weigh off between the need to be efficient (raise revenue) and effectiveness (hard to avoid).  In general, the higher a tax is and the ease of which it can be avoided tend to decrease efficiency. The higher the effectiveness of a tax, the more it will be considered "unfair". I.e. fuel tax, VAT, property taxes, toll roads, TV licence, etc., are very efficient and also among the taxes which are complained the most about.

Taxing labor is a bad thing as it discourages people from working, however it is quite efficient and effective as labor is not particularly mobile. Taxing investment is at least as bad, and it is not particularly effective as wealth can be transferred quite easy, thus leading to low efficiency. 

--------

In general, I am much more in favor of taxing property, consumption and bad things, and let people keep most of the money they earn from their labor and the returns on their investments.

As a last thing, I think the country which introduces finance as a class from middle school and up will find it to have a worthwhile return on investment. 

Capitalism rewards those who pursue monetary gain. It is not a very good meritocracy. innovation is often repressed and gotten rid of out of fear of impact to their business wihtout regard to public or social innovation. Thisis why it is failing. the medical and insurance companies are proof that capitalism is not sustainable. rewarding individul effort based on what you can do which is different than what i can do. Are you saying that money is a better indicator of who's effort is more important than another's? because then we will have judgement calls that money will be the only answer for. I don't consider money an approriate judge of anyones worth. because money doesn't what a blind person see's.

Capitalism rewards those who pursue monetary gain.

Oh the humanity! Somebody doing something because they want to earn money in exchange for their services!

innovation is often repressed and gotten rid of out of fear of impact to their business wihtout regard to public or social innovation.

I'm not sure you're familiar with the word "competition." Hint: it's one of the main motivations for innovation.

Also you can't just try to assert that pursuing monetary gain is a polar opposite to bringing innovation. You almost sound like clergy when they talk about how evil money is.

rewarding individul effort based on what you can do which is different than what i can do.

I cannot parse this. Do you mean rewarding individual effort based on how it compares relatively to others' efforts? If so, how else is it supposed to work?

I didn't mean the pursuit of money in itself bad, but is what we reward heavily and unfairly to our consequence.

I'm not sure you're familiar with the word "competition." Hint: it's one of the main motivations for innovation.

Yes it is but there are others. More powerful forces then competition. Forces that lead to sharing of knowledge and therefor more complete science. Pure discovery, human connections like working in a team, and being of service, rank higher than competition and money in artistic and scientific (seems to be tied together) endeavors.

I cannot parse this. Do you mean rewarding individual effort based on how it compares relatively to others' efforts? If so, how else is it supposed to work?

What I do well may not be what you do well. I may be a great telemarketer while you could be the mozart. I will initially and possibly forever make more money than you at my sales job does that make me more important than you? In my opinion no it doesnt. Right now it doesn't work that way. if it did then great teachers would be getting corporate president bonuses for the effect they have on the future of the students they teach. And that would be a bonus worth giving and paying for in my opinion over the douche bag who comes up with a better legal ponzi scheme. it also means the street person who is disabled isn't look at like a lazy bum because they can't hold a job for more than a few days. People if they have a choice would rather work honestly for a LIVING, but if they can't get a living wage than why not find a way to do so.

I fully agree. When psychologists study the mind's reward mechanisms, it turns out money is way down on the list. Yet money seems to be the ONLY measure in making most political and social decisions.

No one has mentioned that capitalism assumes growth. Unfortunately we live on a single  finite planet. Limitless growth is impossible. As resources are depleting, competition increases. Capitalism has now started to feed on itself. 

Capitalism also depends upon competition. The idea that innovation stems from competition is just silly. Innovation is far more likely through cooperation.

People see the great success of capitalism in the middle of the last century. They don't see, or are not willing to look at, where that wealth came from - namely the parts of the globe who didn't understand capitalism and were ripe for exploitation. This exploitation is now coming home to roost.

Capitalism is in its dying throes. And good riddance. 

At SOME point, humanity has to learn to share the planet.

No one has mentioned that capitalism assumes growth.

Capitalism assumes growth in the sense of growing its business. That can mean no more than taking business away from the competition.

The idea that innovation stems from competition is just silly. Innovation is far more likely through cooperation.

Historically speaking, please name the groundbreaking innovations of the past which were the result of committees. Perhaps we've unjustly forgotten the support staffs of Archimedes, Galileo, Newton, and Einstein. I have been under the impression, though, that they mostly worked solo.

Maybe today, when so much work is done in university science and engineering departments or in projects subsidized by business interests or governments can we speak of scientific-revolution-by-committee, but if so, it's a relatively new phenomenon.

Not to mention that for all the government sponsored 'medical research', as well as all the non-profits (Cancer Society X) raising money to 'find a cure' - I have yet to hear of a single big break in medicine that wasn't discovered/owned by a for-profit company.

Most of the non profit "Discovery's" are bought by for profit companies. That is the dirty little secret about this, it's all for profit, if it's not then no need to release it.

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