What is it that makes healthcare so expensive? I know it's not the doctors. The doctors get their share, sure, HOWEVER the bills that come through are so absurd. For example our daughter was sent on a 3 ambulance ride from one hospital to another and the bill was over $ 2000. I could've thrown her in the back of our car for 1/1000 th of that fee. A reasonable price for this service should've been $ 500 at most. Another time our daughter went to the ER. The doctor only saw her for less than 15 minutes and his fee was $ 188. The fee for the ER visit as a whole was even more than that, I believe several thousand. A reasonable price for 15 minutes of the doctors time would've been $ 75, and the ER visit should've been no more than $ 750.
WHO IS GETTING THIS MONEY? On a $ 1000 bill where does the money go? How is it split up? I realize this question is on some level "hypothetical", but really I would like to know. The cost of healthcare does not match up with the actual services and tools being used. Please don't say that it goes to the malpractice insurance companies. I do know that they get some, but I don't buy the idea that THEY ALONE are the reason why health care services are so expensive.
Pangolin
Insurance companies. They screw the doctors on one end and their subscribers on the other end. They own the politicians, though, so there won't be any meaningful reform.
Hospital costs go up because YOU pay for those who cannot, or choose not to, pay, and for the illegal aliens that get completely free care.
toxdoc333
I agree with Pangolin. Go to any large city hospital and walk into the ER. Signs are not in English and most of the people there are illegal aliens. No, that's not a racist, comment, it's the reality of our current system which pays for anyone who walks into an ER. Someone has to cover the costs of paying for illegal alien medical care (you and me). Same deal with taxes. Someone has to pay for the education and social services support for illegal aliens (you and me). The system is broken and it's not going to get better until we stop paying billions of dollars in taxes and health insurance to support people who for some unknown reason, have weaseled their way into getting a free ride. I work in forensics and I regularly see cases of illegal aliens killing or injuring people (drunk drivers, emotionally disturbed people, etc.). Who pays for their legal fund? (tax payers). Who pays for their jail time, which in the US costs about $ 50000 per inmate per year - tax payers. Who pays taxes? about 50% of all Americans? Who pays the overwhelming majority of that 50%? The so-called "rich" people who pay 40% of their income or more, to the government who pays for all these free programs. That's who is getting the money.
grimmyTea
What Pangolin said is true, but I'll add some more things to think about. ER charges are very high because it has a high overhead. The ER is always open, always staffed with doctors and nurses, and always stocked with running equipment and current medications--regardless of whether there are patients there or not. You aren't just paying for the time the doctors and nurses were taking care of your daughter, you are also paying for the time they were sitting there waiting for someone to come in, the maintenance costs of the equipment that wasn't used, and the medications that were never used and ended up expiring and being thrown out. That is the price you pay for having them available 24/7. Same thing for the ambulance.
Malpractice suits don't amount to a huge amount of money in the grand scheme of things, but their effect on healthcare costs is far greater than the simple dollar amount of the awards. A lot of doctors out there practice what is referred to as "defensive medicine". They will order every test imaginable to make sure they don't miss anything--because if they do miss something, they are afraid they will get sued.
The greater problem underlying the healthcare industry is that it has no built-in rationing system. For example, suppose you have two people--one rich and one poor. They are both looking for a new car. The rich one buys a Ferrari. The poor one however, cannot afford the Ferrari, so gets the used Honda. When you extrapolate this situation to the multitude, you demonstrate the laws of supply and demand. These govern the rationing of scarce resources within a market--cars, in this example. Now take the analogous situation with medical care. A rich person comes in and gets an expensive life-saving procedure. Now a poor person comes in and needs the same procedure, but can't afford it. Does he get it? Of course he does. We aren't just going to let him die. That becomes the fundamental economic problem--there is no constraint on demand. Everyone gets the Ferrari. Everyone wants the latest and greatest medical advancements, and everyone gets it. Medicare cannot deny coverage for any treatment shown to extend a person's life. If that means spending $ 100,000 to extend a person's life by a month, then so be it. Ultimately the cost gets shared by everyone in the form of higher taxes or higher insurance premiums.
I am offering no opinion on whether this is right or wrong. I am simply explaining why costs keep going up.
One idea on how to try to stem the demand for expensive procedures is to expand access to primary care. If people see primary care doctors on a regular basis, they are less likely to require expensive emergency life-saving procedures or ER visits later. That is the rationale for how universal coverage could help lower costs overall (why Obama says his universal healthcare plan will save money in the long run).
An alternative approach would be to pass on more of the cost to the "consumers"--that is, bring the laws of supply and demand back into play. If someone has a flat 20% copay, are they going to try to get that liver transplant that will cost $ 500,000 in the first year? This is closer to the approach the Ryan proposal is taking, although he doesn't explain it as forthrightly. His proposal is to change Medicare to a voucher system in which patients will get a fixed amount of money with which to buy insurance. They would then have to foot any additional costs themselves. How much is health insurance for a sick 80 year-old man going to cost? Probably a lot more than the voucher is going to be worth. If the guy is rich, he will be able to afford the extra costs. If the guy is poor, then he will probably just be able to get some minimum coverage. He would then have to turn down any extra medical care that he couldn't afford. Ultimately this will result in people dying because they couldn't afford the treatments that could have saved them, but it will also probably be more effective at reining in healthcare costs in the long run.
Again, I offer no judgments. I am simply explaining how things are.
John de Witt
Grimmy Tea is very much correct about the lack of feedback mechanisms of supply and demand.
Regulations also have a huge impact.
I might mention that your daughter's doctor may have been in the room for ten minutes or so, but you can bet he had a half hour's paperwork (or computer work) on her case, and that's about the same charges as lawyers' fees.
And don't think it's just the patients. Doctors and hospitals see the costs of their supplies and equipment going up much faster than their fees go up.
Orignal From: why is medical care so expensive?
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