#63 | Posted by pragmatist at 2009-08-15 11:28 PM | Reply | Flag:
Good post.
There are several factors driving health care inflation, which is why it almost always grows faster than core inflation.
1. The biggest factor is utilization. Consumers are isolated from the costs, so they don't demand better value. The attitudfe is more like:
"What the hell, Blue Cross has to pay for it!"
Others resent that they have to pay for insurance that they rarely use, so come up with all sorts of excuses to go to the doctor. That drives utilization.
Do you know that if you offer to pay cash (or use a credit card) for anything, providers will usually cut the fee by half? It is illegal for them to post their rates, but they can negotiate.
I needed an MRI on my knee one time. The charge was $1,200, and my share was $500 (co-pay, deductible). Because I had been a health care reporter for years I knew enough to offer $450 in cash, and they accepted it.
2. Doctors and hospitals do practice defensive medicine in case of a lawsuit. A friend of mine is the most-sued doctor in the state. Know why?
He's the head of the state's largest pathology practice, so his name appears on every pap smear, blood test, occult test, etc. That means his practice is named in dozens of lawsuits a year, even if the error had nothing to do with a blood screen.
He's never had to pay a settlement, but his legal fees of disposing of these cases cost him about $7,000 per episode. Now multiply that for every other person whose name appears in the patient chart.
3. The unseen burden is the mountain of compliance regulations. Last time I checked the Self-Referral regs were 3,000 pages and growing.
Millions of people spend their days studying and interpreting politicized regulations. This is a huge, non-productive burden.
I know contract lawyers who refer to things like Stark as 'The Health Attorney Full Employment Act."
There's plenty more. That's just a sample of what really happens. It's much more complex than some moron saying that insurance companies are evil.