Let’s Reform Health Care by Eliminating Faux Prices

I heard today Republicans plan to make the Affordable Health Care Act, (Obamacare) the center piece of the next election cycle.  Democrats like that.

One problem with our current system in the U. S. is that it is overpriced and has poor quality compared to other countries.  This probably is not important to the avaerage Joe.

More important is the individual’s personal encounters with the system.  Does the average person buy health care and think, “That was pretty good”?

I think the average person encounters frustration and the perception of unfairness.  We get too many bills in the mail that we don’t understand.

The prices of things one buys in health care vary as much as 800% according to the attached article.  Unlike most everywhere else in the world’s economy, if you walk in and pay cash for health care, you pay a huge penalty.  As the article explains so well, it’s like going to the cashier’s window and learning it you pay with Visa its $3, Master Card $2 and cash, $32.

The problem is our health care is trying to operate as if it were part of the market system we have in capitalism.  But, health care does not have the characteristics needed to function like private market.

Markets need both sides, buyers and sellers, to have roughly similar amounts of information.  When there are faux prices and bills we cannot understand, market transactions do not take place.

I think the public is ready to put more government into it.

http://www.fool.com/investing/general/2013/05/14/anatomy-of-the-worlds-most-insane-health-care-bill.aspx

Avatar of Jon Lindgren

About Jon Lindgren

I am a former President of the Red River Freethinkers in Fargo, ND, a retired NDSU economics professor and was Mayor of Fargo for 16 years. There is more about me at Wikipedia.com.
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44 Responses to Let’s Reform Health Care by Eliminating Faux Prices

  1. Wanna B Sure says:

    With Sanford taking over so many local, and regional hospitals, and in addition to a lesser degree a couple other merger tending hospitals, one asks; What do they know that we don’t. Some of our local hospitals are becoming nothing more than first aid station / feeders to the “mother ships” of hospitals. I realize the cost of the new technologies in diagnostics make it difficult for independant doctors and county/city hospitals, but they have teamed up in the past. Virtually all the doctors are now employees of Sanford, and the likes of them. High prices of malpractice insurance rates is one of the temptations for the home town doctor to sign up, and the cost of education makes it almost impossible for a young doctor to set up his own practice. I’m sure there are several items that go into the feasability of the mega hospitals. But when the takeovers are done, the opportunity for “shopping prices” will be much smaller.

    • Henry says:

      The medicare reimbursement rate and the fact it is being cut in Obambacare is a contributing factor to the mergers. The mindless requirements for small hospitals is another contributing factor under Obambacare. Unrelated to Obambacare is the unbridled torts that force hospitals to no longer offer services such as birthing. Too much liability. Oh, wait a second. Obamba saw fit to eliminate tort reform. Obambacare is related to the increasing liability.

  2. Michael Ross says:

    The healthcare industry, like so many areas of our economy is run by an establishment: The AMA, FDA, and giant multi-billion $ pharmaceutical companies. They have monopolistic control over the industry. It often rewards doctors for practices that are not in the best interests of the patient. Healthcare professionals are often afraid to speak against the system or use more natural alternative treatments even if preferred by the patient for fear losing their licence.

    In this system almost no one can pay their own healthcare costs. They must be paid by insurance companies or the government. Hospitals and doctors can charge what they want, no competition. This has bankrupted our economy. Years ago people could pay their expenses out of the pocket. If one carried health insurance it was only for a catastrophic health crises, not for routine checkups, diagnostics,and medications. When I was 8 I had surgery and was in the hospital for a week. My dad paid for it with one check. He was a working man and his wife, a stay home mom. How would that work today? We would spend years trying to pay it off. Government regulation and intervention has degraded the entire system. Let the market regulate healthcare. For those who can’t pay there are friends, neighbors, churches, and charitable organizations. They have worked in the past. They can work now

    • Avatar of Jon Lindgren Jon Lindgren says:

      Michael 3:38 “Government regulation has degraded the entire system.”

      I can’t say I really understand the system, but it doesn’t seem like government regulation is the problem. Republicans will not let the Fed. government bargain over prescription medicine. We pay so much we subsidize medicine in other countries. It seems like this is one area where we don’t enough government.

      • Michael Ross says:

        Government destroys everything it gets its corrupt hands on. Leave the wealth in the private economy and we can take care of ourselves and our families.

        • Avatar of realist realist says:

          Yet government is doing a very good job of running Medicare; virtually everybody who participates loves it. Social security is another government run program that does a fantastic job. Government-haters will never concede these points, but they are true. The private sector takes care of its own and leaves many, many of us behind. What you have said has no history of actually working in any meaningful way anywhere in the world.

          • Michael Ross says:

            You Libs are all the same. State worshipers. Your almighty provider, Uncle Sam. The USGov is your idol. Idols destroy those who worship them:

            “With their silver and gold they made idols for their own destruction.” (Hosea 8:4)

          • Dan says:

            Realist,
            I thought you were joking but as I read your post, I believe that you truly feel that medicare actually works. I would be interested in knowing were you get your information from. Did you know that more and more people on medicare are being turned away because the government has difficulty paying the bills?

            We definitely don’t need more government in our medical establishment. The government-haters (otherwise know as Constitution supporters) believe the following:
            1. Tort reform – This would lower the costs of insuring doctors against frivolous lawsuits.
            2. Allowing for Out-Of-State insurance purchasing. This would offer greater competition among plans. Competition leads to lower prices. Currently, insurance firms in each state are protected from interstate competition by the federal McCarran-Ferguson Act (1945), which grants states the right to regulate health plans within their borders.

            I’ve come to believe that those who always seek government intervention have difficulty making decisions on their own. Once they leave home, they look for someone to help guide them in their decision making. Many liberal elitists claim they are more intelligent that you and therefore, you should allow them attempt to solve your problems. Government is ran by man. Man is not perfect. Man is corruptable. This is why the “government-haters” or Constitutionalists are firm in upholding the U.S. Constitution. It provides a roadblock for runaway government and limits its power to The People. It is your safe guard from Tyranny. Your freedom is not guaranteed.

            If Obama care is soo great, then why did your progressive liberal elitists vote not to carry the coverage for themselves?
            Why did they hire a speed reader to read the entire 2,000 page Obama care bill?
            Why are employeers cutting back on the number of hours that employees work (to avoid having to pay an Obama care penalty).
            3. WHO WROTE THE DAMN BILL TO BEGIN WITH???

        • entech says:

          I heard that about medical marijuana, keep the government away, they will make a hash of it. :lol:

    • Avatar of realist realist says:

      Keep in mind that the reason we even know about the huge range of prices charged by various hospitals is that the Obama administration released the data to the general public that told us what rates in hospitals were. The idea that for “those that can’t pay” a reasonable alternative is to ask friends and neighbors to help pay bills is unrealistic. Although problems remain, at least we now have a framework that will allow everybody to have access to care.

      • Michael Ross says:

        ” a reasonable alternative is to ask friends and neighbors to help pay bills is unrealistic.”

        In this system it is. When the government confiscates half the wealth the economy produces of course we have to go on our hands and knees to get some of it back so we can eat and pay our doctor bills. Its a control game. Everybody is strapped and dependent. Don’t you get it???

        • Avatar of realist realist says:

          I don’t get it because it’s not true. We are the government. I don’t know of anybody who is “dependent”. What are you talking about?

        • Henry says:

          Not sure what “realist’s” mental block is, but the takers are overcoming the givers. The takers are set up already. When the givers collapse in retirement/exhaustion/bankruptcy/insolvency, the givers will be the last on the waiting list to receive the six rolls of toilet paper. The takers will be in line ahead of them. I think the takers have this all figured out.

      • Dan says:

        It’s all going to be rainbows and lolli-pops! Everyone will have coverage and everyone will rejoice and sing together in harmony. Obama will rest on the 7th day and say, “Look what good I have created.”

        • Avatar of Jon Lindgren Jon Lindgren says:

          Dan 5:00 “It’s all going to be rainbows and loli-pops!”

          The Affordable Health Care Act will not be seen as rainbows and lolipops. It would be nice, though, if we could get to the same lower cost and better outcomes as more socialized care systems do. No matter how anti government health one is, there is an inescapable fact: Our current system is inferior.

  3. David says:

    Jon,

    You know more about economics obviously than most. What I don’t understand is how we can increase the demand for health care by lowering what most people pay and expect prices – prices that the government, insurance or some other entity has to pay – to decrease. This seems entirely against basic economics. I think there is an argument to make that health care is too important of a commodity to allow some to not be able to get it. I worry that we have already ratcheted up the demand to the point where the costs have out paced the average Joe’s ability to pay.

    Simple economics would dictate that in order to get prices to decrease we can lower demand or increase supply. Government regulations, both state and federal, from the licensing of doctors (including the length of time students have to be in school) to the requirements of hospitals have squeezed supply to a trickle. Demand has been driven up by free care for seniors (Medicare) and free care for the poor (Medicaid). Also demand seems to be driven upwards by insurance requirements that require payments for various levels of care. I believe we are in a difficult pickle. It is very difficult to reduce demand by taking away free care or requiring some payment. It is also difficult to reduce demand by removing mandates on insurance companies to pay for various items. Throw in the natural increase in demand we see from the aging boomers and I see the prospects for lowering demand to be quite dim.

    How about we do some things to increase supply? When a system is overregulated you see smaller companies crumble or sell off. The cost of entry is way too high. Could the AMA come out with junior doctors or some such thing to get more doctors involved? How about a four year degree to become a doctor or a junior doctor. We have PA’s and nurse practitioners that are filling some of these roles but they require lots of oversight and still have great risk to the MD’s who manage them. Also some tort reform might go a long way. Tort reform will come whether the lawyers like it or not once the government gets more involved. How about tax credits for student loans for Dr.’s. Seems unfair to many but we want to encourage people to be involved in the medical field.

    Another area that may benefit is if we were to change the way pricing is done. I think your article on prices is correct in that no one knows what they pay for care. When you have third party payers involved this is not atypical. I care a lot more when it comes out of my pocket than when it comes from my insurer. If the government pays for the care I won’t care either. I just want the best care. I don’t know that everyone can have the best care. It sort of gets to be arbitrary as to who gets the best care. The insurance system is broken. The medical system is broken. But we cannot defy the laws of economics. It seems to me that government involvement – certainly with good intentions – has lead to a real problem with prices being too high. There are no price signals going to consumers and thus, we so no change in behavior.

  4. Brad says:

    Here is one truth that seems to get overlooked: we have always had universal healthcare. It has been extremely inhumane, inefficient, and expensive, but it has always existed. The main goal should be to move to a better form of universal healthcare, either that or if we want to go hardcore right wing, we will simply need to execute anyone who has a health problem but no money to pay for it. That would solve the cost issue, because dead people require less healthcare than live ones.

  5. Paul says:

    Jon … do any of your commentators have experience/expertise in healthcare? Their statements suggest not. Perhaps comments should be preceded by some explanation why others should read on …

    • Wanna B Sure says:

      Perhaps legislators and trial lawyers should comment on why tort reform has been resisted. Perhaps the administrator of Sanford should explain the sudden expansion across the region. Perhaps a pharmacutical detail salesman could participate. Perhaps a rep from medicare could explain the sharp rise of care cost due to it’s 3rd party presence. Perhaps a major med. ins rep. could contribute. Perhaps actuaries could help out. Perhaps Nancy Pelosi could clear up the things “We will have to wait and see” just what is in the the Obamacare bill. It looks like the law of unintended consequences is firmly in place the more we know. Perhaps the “Bad Drug” law firms seen on TV could expand on the subject. Perhaps the pharmaceuticals could explain reformulation of generic drugs, which do the same thing, taking some of them off the generic list.
      Anyone who has had health problems has experience in healthcare. One doesn’t need a degree or license to ask a question, or have an opinion. Nor does it appear that many with “experience/expertise in healthcare” been a solution to the problem.

      • Wanna B Sure says:

        Perhaps the pharmaceuticals could explain their marketin on TV, which encourages patients to demand the Dr. prescribing the latest and greatest, (and the most expensive) over proven generics. There are many other related topics.

        • David says:

          You know I have a hard time blaming the drug companies. They are in a unique situation with regard to protecting patent rights on drugs to recoup costs and make money. Let’s just say they are not perfect. I think what does become a problem is that people are indifferent many times to how much their drugs cost. Insurance companies in many if not most situations are mandated to have pharmacy benefits. There are often benefits to getting generic drugs, but the economics are often screwed up. So if I get a generic I pay $8. If I get the brand name drug I pay $30. For some they will be on that. For others it’s not enough of a price difference to change their behavior. While the insurance companies are stuck with paying the true cost – perhaps as much as a difference between $1,5000 and $100. If I had to pay the actual cost – I might eat more broccoli, but certainly I would get the generic drug. The pricing system seems to me to be sending the wrong signals.

          On the flip side drug companies have an increased demand due to lower costs to the decision maker. Increase in demand will increase the price. I think the root of the problem lies in many of the mandates insurance companies deal with. But who here wants to argue that insurance companies should pay for fewer drugs! We are addicted to unseen benefits which really screws up the market.

          • Wanna B Sure says:

            I can’t entirely disagree. However I have seen doctors interviewed on the subject of TV advertised meds. According to them, there are some patients that shop for doctors who will prescribe the new drugs they see advertised, even when cheaper drugs are available.

          • Wanna B Sure says:

            The same Dr. shopping goes for prescribing unwarranted antibiodics. My personal Dr. has told me that he has lost patients when he refused to prescribe antibiodics for colds, when they were inappropriate, with a concern for growing resistant strains of disease. Some patients think a shot of antibiodics is a fix all, even when secondary infections are not present. Once those patients go somewhere else that fill their desires, they stay there, and don’t go back to the Dr. that was prescribing responsibly.

          • Avatar of Jon Lindgren Jon Lindgren says:

            Wanna 10:44 “Once those patients go somewhere else..they stay there.”

            I’ve heard also that happens a lot. Then, there are the heroic end of life measures suggested by Doctors. We had a friend about 95 who died a few years ago. Just before he died, a Dr. reccommended some surgery–he died a couple of days afterwards. The family had to pay some $4000 and wondered about the motives of the Dr. The funeral I attended last week was for an 88 year old man who had been on the downslide for 10 years. The family said he was in the ER twice the last week. I don’t know any other details, but we do know the heroic efforts to extend the lives of very old and very sick people is one of the big expenses in the system.

          • David says:

            I think the prescription of antibiotics is also related to price. If I have to pay for full price antibiotics – I might listen closer to my doctor’s advice that it’s not going to help. Simple supply and demand would dictate that if the price is higher people will buy less.

            The flip side to this is to have the government (or some appointed group given authority by the government) mandate who can and who cannot receive antibiotics. No one wants that any more than the insurance company mandating who can and who can’t receive antibiotics. Price seems to be a problem. As P.J. O’Rourke once said, “If you think healthcare is expensive now, just wait until it’s free.”

            This also relates to end of life procedures. Where we have Medicare paying for every last procedure under the sun to prolong life the patient has only to weigh the risk of the procedure versus the cost. If an 88 year old man has to fork out $500k to extend their life a couple of days, the risks seem much higher. These are not easy issues at all. Some turn to government, which is a reasonable response. I dislike the government’s involvement because there are so many unintended consequences.

            I think one thing that Jon talks about and is worth considering is fairness. Should wealthy individuals get the best care and the destitute receive the worst care because that is what they can afford. Where are costs are so high this is magnified considerably. We can accept much easier that poor people have fewer luxuries in life. It is more difficult to accept that the poor not have care that could improve their life or extend their life. One interesting aspect is that with the waning of religious inclinations among the public – especially among the intellectual class and policy makers, death becomes that much more something to fear. One way to ensure fairness is greater government involvement. I think the market tends to keep prices low, thus keeping fairness less of an issue.

          • Avatar of Jon Lindgren Jon Lindgren says:

            David 2;28 “..with the waning of religious inclinations..death become much more something to fear….”

            I don’t have time just now to find it, but I remember a study of peoples’ attitudes toward death. Those who believe in the afterlife tend to fear death more than nonbelievers. One would think it might be the you portray it, but apparently not the case.

          • Wanna B Sure says:

            Jon; I tend to agree with your understanding of the lack of fear of death for the strong leaning unbeleiver. Once the heart is so hardened against any possibility of an after life, both positive and negative, the sensitivity towards it becomes nonexistant. Certainly, the Christian usually doesn’t want to leave this life, with the absence of loved ones, or concern for them, etc. but the assurance of a better after-life is most comforting. We are even reminded “…do not grieve like the rest of mankind who have no hope:1 Thess 4:13-18.
            As for “fear”, that can be a loaded word. It can mean terror / revulsion, or it can also mean honor and respect, as in the explanations to the commandments; “We should fear and love God”—. “Fear” is quite often poorly used out of context. An old word which was better understood in context 200 yr. ago than now. The same goes for many now archaic words in the old KJV. Better understood then than now. A good example is “fear of the Lord”. Not meant to be “terror”, but respect /honor. Some of the newer translations use more current applications for the same content. Our vocabulary may change, but the content doesn’t. I think even George Carlin was aware of this.

          • Avatar of Jon Lindgren Jon Lindgren says:

            Wanna 3:59 “Our vocabulary may change…”

            Your own use of words has questionable validity. When you say, “Once the heart is so harded against any possibility of an after life…” you are assigning an attribute to someone like me that I did not claim and do not experience. Exactly what is a “hardened heart”? Does my organ called a heart become a rock?? Of course, you are implying there is some lack of emotional attachment to an afterlife. That is an admission you have no other reason to believe it is so. You are relying on your emotions to justify a belief somthing is true.

            A person like myself sees no evidence of an afterlife. My “heart is not hardened”. If I said to you “A fairy will come to visit you tonight,” your doubt would be intellectual–you would doubt such a thing. The doubt would not be an emotional reaction.

          • Wanna B Sure says:

            Jon; You just made my point.

    • Avatar of realist realist says:

      You first, Paul.

    • Avatar of Jon Lindgren Jon Lindgren says:

      Paul 1:47 “do any of your commentators have experience/expertise in healthcare?”

      I suspect not, and, this includes me. Whenever I bring up the topic of healthcare I am uneasy knowing you might read the blog. Then, there is my doctor friend of many decades, George, in Dallas who wrote me a PM some time back he reads my blog. Like you, George is a pilot and deals with legal issues in medicine. Any critique of my blog or the comments of others is welcome–even though the topic does not lend itself to these short posts.

      I’ll just take a moment to expand on my post in response to David’s post. It’s about rationing. My family is just now dealing with a “rationing” issue in the current system. Our daughter is in health care and works for a large hospital in another state. She has a daughter, our granddaughter, who we think might be helped by an extensive mental evaluation at a large university hospital system, like a Rochester work up. The cost would be in the neighborhood of $10,000. It is not covered by our daughter’s health insurance.

      That it is not covered is very understandable. Employers, even hospitals, cannot simply offer unlimited coverage, so they develop their own rules, just as government would have to do. The political trouble liberal people have is that conservatives scream, “The government would ration health care!!!” It is not easy to explain that this is true, but it might be, and I say might, better than the current system of rationing.

    • Michael Ross says:

      Is Paul an “expert”. He is certainly elitist minded. The groveling masses cannot think for themselves. “Experts” must do that for us. But it is “experts” that have given us this bankrupt system sometimes described as “Slash (surgery), Burn (radiation), and Poison (chemo, pills,etc.). The most expensive and toxic ever devised. A better system would emphasize prevention and more natural intervention:

      “Let food be thy medicine and medicine be thy food” ~ Hippocrates

      “Their fruit will be used for food and their leaves for medicine.” .(Ezekiel 47:12)

      • Henry says:

        MR:“A better system would emphasize prevention and more natural intervention:”

        No doubt natural intervention should not be overlooked. However, it is not the cure-all. I did note a local healthfood seller recently died in town at a fairly young age. Even in my own family, some people who lived off the natural “fat of the land” without the preservatives/chemicals have died young. I agree with natural, but it does not solve everything.

        • entech says:

          I returned, … the race is not to the swift, nor the battle to the strong, … but time and chance happeneth to them all.

          True, I have seen TV interviews of people reaching a hundred and attributing long life and health to good clean living. The interview finishes with a statement about the elder brother a lazy self indulgent, smoking, drinking waster.

          Good health management can help but it seems to me then if you have a genetic propensity you only postpone and minimise the problems.

        • Michael Ross says:

          I didn’t say it was a cure-all. I just said it should be emphasized, not ignored as it is now. This system puts more responsibility on the patient and family to take care of their own health but doesn’t make $billions for the medical establishment.

      • Wanna B Sure says:

        Yes. While I may not doubt “qualification” to be important, Paul does seem to suggest an elitism unbecoming his apparent gravitas. If the medical patient or layman is to remain silent on these and all subjects, the business of medicine will remain unaccountable. A single payer system would not be free of many of the same problems. The bureaucracy would almost guarantee it. Questioning service/procedures along with prices; fixed or variable will help keep the bureaucracy more accountable/ honest. One is reminded of Doctors and hospitals caught in regular medicine and medicare fraud, ie. billing for unused services, supplies, and unnecessary testing. I really don’t think this is what Paul desires, but that’s how it could be understood.

  6. Brad says:

    Can any so-called “expert” or someone with “superior” knowledge of healthcare dispute the fact that everyone needs healthcare? At the end of the day, if you have someone who has no money and needs care, the only two choices is to either let them die or pay to have them treated.

    This is where the pro-lifers are at odds with their own supposed concern for human life. They will move mountains to protect the unborn, but when it comes to healthcare everyone who is born can just drop dead for all they care.

    • Avatar of realist realist says:

      Right again, Brad. A cellular zygote should have rights, but not someone who needs treatment for cancer. Those people have to pass the hat.

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