Saturday, July 8, 2017

Healthcare: "Sorry Folks, It’s COST"

"Sorry Folks, It’s COST"
by Karl Denninger

"This is getting closer to the mark, but they still won’t use the magic words…

About a year ago, I wrote a story about a family that went to the emergency room, had a Band-Aid put on their 1-year-old daughter’s finger, and then were billed $629 for the encounter. Since then, I’ve gotten countless letters describing other outlandish medical bills. These include:

A $2,237 bill for liquid stitches and a bandage. This emergency room visit lasted from about 11:30 pm until 1 am, so the hospital billed for two days spent there.
A $900 bill for four stitches in the emergency room.
A $1,000 bill for a pneumonia vaccination delivered in a health care clinic.

The list goes on and on. These sky-high prices are what make health care policy a vexing exercise for legislators on both sides of the aisle. Because our prices are so high and the federal government has a limited budget, the architects of the Affordable Care Act settled on expanding access to largely high-deductible health plans. The Republican plans would drive those deductibles even higher, leaving consumers on the hook to cover the pricey services. Right.

Now how do you justify any of that? You can’t. Nor can you justify MRIs that are 2, 3, 5 or even 10x or more what is charged in other industrial nations. But they are.

Then you have this: "Blue Cross and Blue Shield of Minnesota claims that the state’s largest pediatric hospital has refused to accept payment reductions recently adopted by more than 10 other medical centers. Children’s Minnesota counters that a proposed 33 percent cut to Medicaid rates - one of the biggest sources of revenue for the hospital - would be “catastrophic” and force painful service reductions."

Catastrophic eh? How many administrators of all sorts - that is, anyone who never provides any actual care to a person - have been added by the hospital system over the last 10 years compared with physicians and nurses? Who makes decisions on what overhead is acceptable?  What can be billed to other people? In a market system competition does that. If you try to add 10 administrators for every doctor someone else does cash-only and adds zero administrators. They don’t need ’em, since they only take money. Their bills are 1/5th yours. You go out of business.

What kept MCSNet from hiring all sorts of administrative staff? Exactly that. If I had tried it my competitors would have pounded me into the dust.  Same with other people who were reasonably called “overhead.” Who stuffed racks with modem servers and cards? I did. Why? Because it didn’t need to be done all that often and hiring someone competent to do it when I didn’t have a full-time requirement for them would have meant that I would have added a $50,000 salary to the cost side of my ledger but only gotten $3,000 or $5,000 worth of billable value out of him or her. The rest?  Someone would have had to eat it, and in a competitive market you get tattoed if you make those sorts of decisions.

So you don’t. You analyze every job, every position, every person. You figure out what you have to have, and what you don’t. You make your decisions and then the market either rewards you for those choices or punishes you. But in health care we get none of that. You can’t get a price. You can’t negotiate. You get hospital systems running whine-n-cry ads claiming children will be harmed if they don’t get their way. Imagine what the reaction would have been if I argued that kids would be harmed because I couldn’t charge $10/month more for my Internet service. I would have been laughed out of town.

Folks, this leads to problems like this - 99% of bills for more than $3,000 going unpaid because they can’t be paid. They can’t be paid because you were first charged $12,000 a year for worthless “insurance” on top of which you had to meet a $7,000 “deductible”!

You’re already broke, so where you gonna get that sort of money? $19,000 in a year is approaching 40% of gross (pre-tax!) income for a lot of families. You can’t pay it, so you don’t. You never meet the deductible because you can’t pay the charges. And thus you wasted $12,000 for exactly nothing.

But someone got the $12,000. And those someones are all over the place. They’re the doctors. They’re the hospital employees most of whom never provide a single second of care to a single person during their career. Those people were hired at a rate ten times that of doctors and nurses, who actually provide care to people, yet they get paid just like the doctor does.

All of this is enabled by a system that, I argue, is a racket wildly and outrageously in violation of 100+ year old law - specifically 15 United States Code, Chapter 1, along with state consumer-protection statues which broadly define any scheme to deceive someone as to the price for a given product or service as a criminal act.

Never mind Robinson-Patman which makes illegal discriminatory pricing that reduces competition between buyers of like kind and quantity of goods. You know, things like stents, drugs, artificial hips, syringes and other common medical supplies? Yes, those; essentially all of which flow over state lines and thus are subject to federal law since they flow in Interstate commerce.

Has there been one attempt to address any of this by either the State or Federal Government? Nope. Not one. Never mind that this one-sentence bill would stop 90% of the extortion game with insurance companies. Why?

Because they couldn’t force you to buy overpriced insurance of dubious value by having a hospital threaten to charge you 10x as much money if you refuse to purchase that tied product. Instead you’d be charged Medicare’s price, which would instantly force insurance companies and providers to quote prices and provide value for the money spent instead of literally shoving a gun up your nose and threatening you with bankruptcy if you refuse to fork over $12,000 for nothing at all in return.

It’s not like there aren’t answers folks. What’s missing is your demand, along with enforcement via all legal and available means that those answers are taken up, debated and passed into law."

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