Why are medical tests so expensive? (1 Viewer)

[Marianne]

http://www.medicalnewstoday.com/heal...p?newsid=50795

Quotes from the above article:

"The number of Americans without health insurance went up 1.3 million from 45.3 million in 2004 to 46.6 million in 2005 - an increase from 15.6% to 15.9% of the country's population, says a new US Census Bureau report. The total number of Americans with health insurance went up from 245.9 million in 2004 to 247.3 million in 2005. David Johnson, Housing and Household Economic Statistics Division, US Census Bureau, explained that the increase is mainly due to more employers opting not to offer health insurance. In 2005 59.5% of employees had health insurance sponsored by their employers, compared to 59.8% a year earlier."


"It is surprising that number of uninsured Americans is rising while at the same time the economy has been doing well. In many other developed countries, such as the UK, the percentage of people with no health insurance is zero. The gap in life expectancy and infant mortality between the USA and most other developed nations is widening."

 

[Marianne]

I know my post is not about the high cost of medical tests but there is some relevance.

If you asked the same question in the UK: "Why are medical tests so expensive?" The answer would be a blank stare - because they wouldn't know - they don't have to consider such things. (This is not a comment on the UK medical system, of course!).

From my last post: "In 2005 59.5% of employees had health insurance sponsored by their employers, compared to 59.8% a year earlier."

This fails to mention that many of the 59.5% of employers who provide health insurance have drastically cut benefits or expect employees to pay an increasing share. Or that the medical plans offer less coverage than they did the year before.

 

[Joseph DeMartino]

Let us all remember the famous line about "Lies, damned lies, and statistics".

In any "study" context and data are everything. Unfortunately summary reports that appear in the news media or even some professional medical publications don't provide much of either.

For instance, one reason infant mortality rates in the U.S. appear high is that standards of American neo-natal care and pre-natal care are so much higher than in many other parts of the world. Also because American hospital reporting requirements are so much more stringent. (In part thanks to the very lawyers and insurance companies that cause problems in other areas.)

In short our numbers suck because our medical care is so good.

Specialist training and technology for delivering and saving premature babies in particular is much more widely distributed in the U.S. than in other countries. Infant mortality figures are, after all, based on "live births". The fact is that infants in the U.S. make it to the "live birth" stage who would be stillborn in many other countries. Death rates can be high in neo-natal intensive care units, but not as high as the death rate for at-risk babies born in countries that don't have neo-natal intensive care units, which have few of them, or which lack both the latest technology and personnel with the latest training.

Compounding the problem is the reporting. It is not uncommon in some places for a child who dies within 12 to 24 hours of delivery to be officially recorded as "stillborn". The numbers would look very different if everyone used the same reporting standards. But some countries are under pressure to improve their stats in order to qualify for aid programs, and the simplest way to do that is frankly to cheat. (BTW, some industrial countries in Europe also follow such "standards")

Numbers are tricky things. What if you needed surgery. I give you a choice of two doctors - one has a patient mortality rate of 1 dead patient in every 10 surgeries. The other has a mortality rate of 1 dead patient in very 1,000 surgeries. Which one do you pick? Seems obvious, doesn't it?

Now let's add the context: You have a very rare and almost 100% fatal condition. Without surgery you're going to be dead in a month. The surgeon who loses very few patients is a good one, and he's familiar with your condition from his reading and from lectures, but he's never operated on a patient with the problem. The guy who loses 10 percent of his patients is the world's leading authority on your condition, and he only operates on people suffering from it.

Now which surgeon do you want?

The same guy was an incompetent butcher who killed 10 percent of his patients (according to the numbers) based on one set of facts is a miracle worker with a 90 percent cure rate with the other. Which one do you think gets sued for malpractice by grieving relatives more often?

Great hitters also get more strike outs because they get more at-bats and swing at more pitches. Great quarterbacks throw more incompletions and interceptions because they throw more passes and take more chances. (And because when the receiver bobbles the ball and a defender plucks it out of the air it counts as an INT anyway, but that's another matter. )

American medicine has the skill the money and the technology to tackle cases that others would write off. Sure you rack up more "failures" that way than you do if you don't try in the first place, but which kind of failure would you want to risk? Again, transplants aside, I can't remember ever hearing about an American patient of any insurance or economic status dying because he or she was on a waiting list for surgery or to see a doctor, and such stories are routine in much of the so-called "developed world".

Regards,

Joe

 

[Jeff Gatie]

In line with Joseph's post, how many of those employees had family health benefits through their spouse or parents and thus chose not to partake in the benefits offered by their employer? How many were covered by Medicare/Medicaid? My mom is 73 and works 30 hours a week and has no "health insurance sponsored by (her) employer." That's because she'd lose her Medicare benefits (which she supplements) if she chose her employer's health plan. My dad had no health insurance from his employer (him) before he received 2 years of care for pancreatic cancer before he died. Why? Because he was a Navy combat vet and had full benefits from the VA.

You cannot statistically compare a system that has redundancies between providers/plans/recipients, never mind a dozen more ways of aquiring healthcare besides through an employer, with a system in which a single provider covers everyone.

 

[Joseph DeMartino]

That's a "difference" of three tenths of one percent. Ask a statistician how "signficant" that is.

Over a single one-year sampling period.

Pardon me if I don't panic over this devastating downward "trend".

If the number next year were 59.9% or even 60.2% would anybody be breaking out the champange and declaring that we were on the way to universal coverage?

Didn't think so.

Such differences only "count" when they reinforce our own preconceptions.

3/10ths of 1% has got to be within the margin of error for whatever survey produced the number. Forget "lies, damned lies and statistics", that's just meaningless. The difference between the two figures could be accounted for by a single typo or two survey phone calls disconnected prematurely. Statistics are bad enough, but this is just a joke.

Regards,

Joe

 

[Jeff Gatie]

As another example of why you can't compare the number of employees who have "health insurance sponsored by their employers" with any socialized, universal coverage system:

A friend of mine has a full and a part-time job. Both jobs have full employee health benefits (yes, health benefits for part-time - who da thunk it?). His wife happens to have a better family plan from her employer than either of these plans, so they chose the wife's family plan for him, the wife and two kids. So, here is a guy who has the choice of 3 different options for full health care, yet he would be counted in the "15.9% of the country's population" who have "no health insurance sponsored by their employers".

Still alarmed by these "surprising" statistics?

 

[Marianne]

However much you guys try to put a good "spin" on it:

"In 2005 59.5% of employees had health insurance sponsored by their employers, compared to 59.8% a year earlier."

Does this mean that close to 50% of employers don't offer health insurance or that they do offer it but their employees decline it (in favor of spouse's plan, etc).

I have first hand experience of small company health insurance because I was the administrator of the health plan for a small company. The employer paid $200 per month for each employee towards the cost of coverage. BTW this amount had not risen for about 10 years while, as you are aware, health insurance costs have soared in that time. Most of the employees didn't have a spouse's plan to "fall back on" so they had no choice but to pay the difference (some of them paying out an additional $600 per month to cover their spouse and 2 kids).

Sounds to me like you guys (Joseph and Jeff) are lucky enough to have adequate coverage so haven't experienced the other side!

 

[Jeff Gatie]

Uhhh, did you read my personal anecdote from before???

Link

I would hardly call me "lucky". Then again, there is often a reaction of "you just don't know what it is like" when someone supports a system that may not be beneficial to them personally but may be beneficial to society as a whole. Forethought like that is hard to grasp for some; selfishness being human nature and all.

 

[Jeff Gatie]

By the way:


You are asking the same question as me. Until the data is known, comparing it to government sponsored universal converage is not only useless, it is misleading and false.

Edit: I jumped the gun. You are not asking the same question as me. Saying that "In 2005 59.5% of employees had health insurance sponsored by their employers, compared to 59.8% a year earlier" could mean "close to 50% of employers don't offer health insurance or that they do offer it but their employees decline it" is also misleading and false. I'll leave it up to you to figure out why.

 

[Joseph DeMartino]

The number of people who get their health insurance paid by their employers would ideally be zero because there is no more logical connection between "employer" and "health insurance" than there is between "employer" and "auto insurance" "housing" or "food" or "dry cleaning". We don't expect employers to pay for those things (some of which are necessities in a way that health insurance isn't.) We expect employers to pay employees money with which they will go out and buy these things for themselves, choosing the cars, houses, food and laundry services that best suit their own individual needs.

Employer-based health insurance was invented as a way of getting around another ham-fisted government attempt to "control" the labor market. 60 years later we're still living with it. It is an idea whose time has past. It should be eliminated entirely, not extened.

And no, Marianne, I'm not one of the lucky ones either. Nor am I trying to "spin" any statistics,

Beginining in the fall of 2000 a creaky economy, collapse of the mortgage business (where I was then working), 9/11, and a series of hurricanes took me through a period where I collected unemployment (for only the second time is a working life that started in the mid-70s) and then a series of contract or part time jobs, none of which carried medical insurance. I couldn't afford COBRA. (I couldn't even afford my house, finally, and had to sell it and downsize. Then I got ratted out and forced to move out of the cheap condo I'd found in a retirement community because I didn't meet the age restrictions. I moved three times in a single calendar year.) My present job is with the state and our insurance frankly sucks. Private industry in my locale does much better by its employees. I'm still making $20K less a year than I did in 2000 and the benefits don't begin to compare.

And absolutely none of this colors my opinion the health care finance system in this country. (We do not, contrary to scare stories in the press, have a "health care 'CRISIS'" in this country. We do have a serious problem with the way we pay for medical care, which could one day grow to be a crisis. And is more likely to the more people try to fix the present problem by applying more of the same old solutions and failed models.) The present system is utterly irrational and needs to be junked, not defended or propped up or tinkered with around the margins.

P.S. to Jeff:


I completely missed that the first time through, engaged as I was with the fractions. You are, of course, exactly right.


Regards,

Joe

 

[Marianne]

I suppose what I am trying to say is that for most people health insurance is getting less available and less affordable.

Another "statistic" I have seen is that around 45 million Americans don't have any health insurance.

Sorry if I implied that you guys had great insurance - but I am not on one side or the other - you don't have to take sides in order to argue an issue!

 

[Marianne]

Quote:
"Edit: I jumped the gun. You are not asking the same question as me. Saying that "In 2005 59.5% of employees had health insurance sponsored by their employers, compared to 59.8% a year earlier" could mean "close to 50% of employers don't offer health insurance or that they do offer it but their employees decline it" is also misleading and false. I'll leave it up to you to figure out why."


59.5% of employees had health insurance sponsored by their employers

means that:

40.5% of employees didn't have health insurance sponsored by their employers

means that:

of the 40.5% some of them chose to have coverage through their spouse, some of them chose not to have health insurance through their employer or their spouse, some of them didn't have the option because neither their employer or their spouse's employer offered health insurance, etc, etc.

I get it now

 

[Joseph DeMartino]

The answer to your question is "No." Or rather, "It is impossible to know that from the data you have provided since it only tells us about employees and tells us nothing about employers."

You're still not getting it. You cannot derive the percentage of employers who provide a benefit from the percentage of employees who receive that benefit, because employees are not uniformly distributed across all employers.

Try this:

There are three employers in a town, "A", "B", and "C" corporations.

"A" provides health insurance and employs 80% of the townspeople.

"B" and "C" don't provide health insurance, and each employs 10% of the townspeople.

Following your reasoning, we'd conclude that 80% of employees had health insurance through their employer and therefore only 20% of employers failed to provide health insurance.

In fact, 80% of employees in that town would have employer-sponsored health insurance - but only 33.3% of employers would offer it. 66.3% percent of the employers would not.

If A, B, and C all employed 33.3% of the townspeople then your method of "calculating" the percentages would produce the right answer(s), but only by accident.

Regards,

Joe

 

[Marianne]

Joseph, I think we're going to have to take this outside!

 

[Devin U]

Medicare and most private insurance companies reemburse hospitals at a average rate of 36% for procedures (it will vary greatly, but thats the average). If a hospitals costs are $3600, there gonna bill $10,000. Unfortunatly, there gonna have to be someone who pays the full $10k.

I work in the healthcare field, and I dont like how it works. But at the same time, I dont like the alternitives. Nationalized healthcare is a joke. I worked in Brittan for a while and saw how efficiently it works over there. Here, lets say you come into the er with chest pain. They do labs and a ekg and determine you are having a heart attack. You may be taken immedietly back to a cardiac catheritzation lab and get a angiogram. If you have significant blockage, you may go strait back into surgery and have bypass surgery. In the UK, you go to A&E (what they call ER) and have the same labs and ekg. They dertermine you are having a heart attack. If you have a seconday private insurance policy, you may have the exact same experience you would have in the US at a private hospital, but if you have to go thru the NHS, you may have to wait 2-3 months for your angiogram, and after that, you could wait up to a year or two for bypass surgery, if you are under 75 of course. Other wise, you are too old for bypass surgery. If I had blocked coronay arteries and knew about it, I surely wouln'dt want to wait a year to get them fixed.

 

[Bryan X]

Just so no one gets the wrong idea, Medicare will NOT pay a % of ANY price a hospital charges. So a hospital cannot charge a ridiculously high amount just to get more money out of medicare. There are limits and believe me they aren't very high.

But Devin is right, one of the reasons prices are high is because payors like Medicare and Medicaid pay so little. So to make up for that, customers who don't get the big discounts get stuck with the full charge. But even that doesn't always work out all that great for a hospital because if you are a self-pay customer (ie. no insurance) oftentimes you can't afford the bill and some or all of it will be written off.

 

[Joseph DeMartino]

In short the ordinary market forces are still there despite the distortion introduced by 3rd party payers. The costs are what they are, the price that has to be charged to make a profit remains what it is, but because some pay an artificially low price, others are charged an artificially high one. It is like squeezing a balloon - squeezing doesn't make the balloon any smaller, it just displaces air from one part to another.

Without 3rd party insurance that conceals costs from patients and Medicaid/Medicare that use the coercive power of government to force "favorable" terms, the average costs would go down across the board. (In fact, removing the layer of overhead required to comply with the paperwork in all these cases would introduce still greater savings, as would the increased competition among providers who now had to convince medical consumers who were spending their own money to use their services.)

And all of this is without even talking about the massive cost of fraud in insurance and goverment-sponsored programs, fraud which the sheer complexity of the system practically invites. I once worked for a highly-respected medical institution in New York State. Once upon a time it was discoverd that the facility, which sometimes treated patients referred by an allied hospital in Manhattan, had been billing the Feds for dozens of patients who didn't exist. When a full scale investigation started going back in the records it turned out the scam had been going on undetected for years and that the total number of phony patients "treated" and billed for might be in the thousands.

None of the idividuals or institutions involved had anything like the financial resources to pay for the fraud. In the end, partly to protect the reputation of the institutions involved, a sealed plea arrangement was reached whereby the senior financial personnel were fined and dismissed, new auditing procedures put in place, nobody went to jail and there wasn't a word about it in the newspapers. The two fired employees, nice guys whom I would never have suspected, were almost immediately hired by a private healt care facility in another state. I hope they were kept away from the Medicaid and Medicare billing.

More recently, a senior employee of the state agency I work for, which oversees the state administration of certain Federally-funded programs, was fired when she was indicted in another state. This person was charged with embezzling hundreds of thousands of dollars from a previous employer - that same Federal program. (My agency had hired this person because they wanted someone familiar with the inner workings of that particular Federal program and their grant-writing and evaluation process. )

Regards,

Joe

 

[RobertR]

Interesting story, Joseph. It fascinates me that some people are so eager to point out fraud in private businesses, and so eager to throw about terms like "robber barons" and thereby demand greater management by government, yet are so willing to ignore the literally hundreds of billions of dollars lost by government to fraud, shoddy accounting, and mismanagement.

 

[Joseph DeMartino]

And mostly in small amounts, not giant, scandal-producing ones. The hundred dollar kick-back to an inspector. The "consulting' contract given to an official's son or wife. The "we don't really need the money but we've got it, so lets spend it" imperative in every government department's approach to governing.

Not too long ago, the all-in-one one printer/scanner/fax in our area ran out of ink. Normally I'd ask our department assistant to grab some, but she was out sick that day. So I got the key to the supply closet myself and started looking for the right ink cartridge. (Any of you who have ever dealt with HP inkjets and their sadistic and bizarre way of naming cartridges will know what a pain this is.) I thought I saw some more HP cartidges on an upper shelf, but there were a couple of boxes in the way so I had to grab them and set them on the ground before I could get to the ink. The boxes were covered in dust when they hit the floor I was briefly enveloped in a small, brown, sneeze-inducing cloud. When the air and my eyes had cleared, I realized that they were two DVD recorders, brand new, never opened. Wiping away the rest of the dust I read identical notes in magic marker: "Homeland Security Grant - John Smith". John Smith obviously wasn't the man's real name, but here's the interesting part. He'd left the agency in 2002. Apparently we'd received some sort of grant from DHS because we assist in coordinating disaster response, and somebody decided it would be a good idea to have a couple of DVD recorders, presumably for training purposes and to reproduce materials created in-house. The fact that we'd never used them, and nobody from Mr. Smith's department had ever asked about them, suggests the need was less than critical. In 2002 DVD recorders were a lot more expensive than they are today, which makes them even more of a waste, while PC DVD burners have always been much cheaper alternatives (and are now standard euipment on the Dells we buy through out state contract.)

That same day I came across 3 "new in the box" but very old laptop docking stations for portables Dell has since stopped making. Each of the boxes had the name of an agency executive. We had ordered the docking stations when they got their first laptops, never used them, and still had them in storage years later when the people concerned were on their third or fourth laptop - models no longer compatible with these docking stations. Again, obviously these folks didn't need docking stations. (Or when they discovered that they did, they didn't know about the ones on hand and just went out and ordered new ones! )

Time for one more? A local school district got a grant for putting PCs in the classroom, wiring each school as a LAN and joining them all as a WAN. Then they got a separate grant to buy more computers. The LAN/WAN project bogged down almost immediately in a maze of ever-changing specs, vendors, subcontractors and consultants. Meanwhile the grant for the PCs was about to expire and the money would have to be returned. Rather than miss out, the school board went ahead and bought several hundred PCs and warehoused them so they'd be read to go when the network issue was ironed out. This turned out to take several years, a couple of changes of consultants and a criminal investigation. But finally the plans were in place, the network routers, servers and desktop applications purchased, and the project ready to move forward with an Active Directory network that use roaming profiles to allow students and teachers to "carry" their own settings and documents to any PC on the network while providing a secure back up for all the data.

That's when someone realized that the PCs in the warehouse were all Windows 95 machines that didn't support roaming profiles, and were very cranky Windows 2000 clients. They also didn't have the RAM, disc space or processor speed to handle an upgrade to Windows 2000, so even if the money could be found to upgrade the operating systems, it wouldn't be worth it. All these years later it would be cheaper to buy new PCs than to bring the old ones up to current standards.

Enough PCs to serve the needs of a county-wide school district had to be sold at auction and not one of them had ever been taken out of the shipping carton.

This is just the stuff I know because I see it myself or because I hear about it from eyewitnesses. (One of the guys who eventually made the school district network function took a certification class with me. )

Regards,

Joe

 

[Chu Gai]

I think a good start towards eliminating 'some' of the fraud and inefficiency in government might be to move towards term limits for the Senate and House.