Thursday, July 23, 2009

Understanding Healthcare costs

Whenever we think that something "costs too much", it is helpful to understand how costs become costs. What goes into the price of (in this case) healthcare? After all, the great policy debate of healthcare is about "lowering costs"? Congress's Speaker of the House, Nancy Pelosi said that healthcare reform can be summed up in two words..."Lowering cost".

In healthcare, the costs have skyrocketed in recent years due to factors above and beyond the simple calculation of a medicine or health service. two things come to mind quickly:

1) Bureaucracy -There are medical practices in America that have on staff more people that do administrative work than there are people to provide healthcare service. Our healthcare system is overloaded with paperwork. Insurance forms, medicaid, medicare, federal reports, state & local reports and so on. This massive cost ends up as part of "healthcare costs".

2) Legal costs- We live in a litiginous society, unfortunately. granted, some of it is necessary. But in recent years costs tied to legality and lawsuits have risen dramatically. It is now very common for many in the medical profession to pay malpractice insurance that is in six digits (or even seven). In other words, part of being a medical professional is to pay over $100,000 per year just to keep yourself from being sued out of your job!

Current healthcare proposals will do little (nothing?) to address these two very expensive components of "healthcare costs". But...if you think healthcare costs are high now, what do you think it will be after so-called "reform"? the "math"...

Before "Reform": Healthcare costs
After "Reform": Healthcare costs + 31 new federal bureaucracies

Ask your representatives in Congress to come up with the "new costs".
Hint: the total amount will be north of $1 trillion on top of current costs.

I can sum up my feelings about healthcare reform with one word: YIKES!


  1. Paul, in my opinion, the current health care crisis can only be fairly addressed by raising the inequities to ALL parties, doctors, patients, those without insurance, large business owners, small business owners, etc.

    Also, how can health care be for profit? Doesn't this set up a conflict between the needs of the patient, stock holders and especially the insurer's board who will take huge bonuses for maintaining a profit, stock price? In short, the conflict is to maintain profit by cutting costs, the easiest way of which is to deny benefits to individuals who often have limited time and resources to fight back.

    I belive President Obama is on the right track trying to develop a comprehensive program. It is still a work in progress with fair debate going on about cost controls. The Republicans seem off the rails fighting it over idiology as they did against social security under President Roosevelt and Medicare years later.

    I don't know if any one can come up with a fixed cost or "perfect" program just as my oncologist can't predict when I will no longer need chemotherapy. But I paid into social security and private health insurance for 40 years and expect them to work for me now. In my case, they have.

    This is a time for serious, comprehensive discussion to do the best we can for ours and future generations. Let's not get hung up on idiology or some perfect answer. As I said to my oncologist, I don't expect perfection, just the best we can do.

  2. Your ad on the left overlaps the text, and you can't close the box, so I can't read the first paragraphs of the article. Well, I did, but to do it, I had to cut and paste the text to see it. I'm using firefox as the browser.