The U.S. Healthcare System Is A Mess

The U.S. Healthcare System Is A Mess

The New York Times (NYT) just published an article titled “Hospitals and Insurers Didn’t Want You to See These Prices.” That article is the stimulus for this blog.

Have you ever remodeled a bathroom? Imagine walking into a plumbing fixtures store only to discover that none of the items have their prices posted. Instead you are told to call a phone number. Imagine further that after you make that call, the person on the other end first asks you for the name and license number of your contractor. After enquiring why, you are told that the price of the fixture depends on the contractor who will be installing it. When you ask for the name of the contractor who gets the lowest price, you are informed that they are not allowed to provide that information.

Welcome to the world of American healthcare. In no other developed country are prices so intentionally obscured and range so widely. Here are some of the examples cited by the NYT article:

  • A colonoscopy at the University of Mississippi Med Center costs $2,144 with an Aetna plan but $782 with no insurance.
  • A flu vaccine at Erlanger Health in Tennessee costs $201 with a United Healthcare plan but $54 with a Cigna plan.
  • At Massachusetts General an MRI of your knee costs between $830 and $4,200 depending on the insurer.

It’s not solely the insurance companies that are causing this mess. Sutter Health in California has come under scrutiny for its own monopolistic pricing. Regardless of who’s the greedy party, when contracts between hospitals and insurers prohibit rate disclosures consumers do not benefit. And although the federal government requires healthcare providers to post their prices, few are doing it (perhaps because the penalties are so low compared to the profits they are making).  

Is there a solution? Not while our political leaders have entrenched themselves on opposite ends of the field. One side wants healthcare to be purely free-market capitalism with little or no government involvement. The other side prefers a single-payer government-managed system. COVID has exposed the ineffectiveness of the former when it comes to fighting a pandemic. Our private sector healthcare providers ran out of masks, ventilators, and all kinds of basic supplies needed in a pinch. Regarding the latter, can the government manage a system covering $300 million people? Even if it’s devolved to the states to implement, we have examples such as the California EDD which cannot even answer more than 12% of its support calls.

Medicare has turned out to be a reasonably effective hybrid government/private healthcare system. Its relatively standardized options are easy to explain and understand. And Obamacare ensures that younger clients will be covered for unexpected and costly medical conditions as well as for any health problems they may already have. But Medicare is woefully dysfunctional when it comes to pharmaceuticals. Not only is coverage pricing incredibly complicated, the federal government is prohibited from negotiating drug prices with pharmaceutical manufacturers (making it virtually impossible to control them). Part of Biden’s social change bill includes expanding Medicare to dental, hearing, & vision as well as help for home health care and Obamacare. Reducing prescription drug prices is also on the list. But it’s unclear as of this writing how much if any of it will become law. In any case my vote would be to try to fix what we’ve got rather than trying to turn American healthcare solely over to private insurance companies or to the government to run. Medicare is at least a decent start.

When I hear some politician assert that we have the best healthcare system in the world I have to wince. Not only is ours the most expensive – almost three times the average cost per person compared to the OECD countries according to data from Transamerica – our medical outcomes are not even on par with theirs. And as long as those politicians continue to believe what they say (or pretend to) I don’t see much hope for a real fix in the near-term future.

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