With few exceptions, private insurers tend to be relatively weak when bargaining with hospitals, so that hospitals can extract from them prices substantially in excess of the full cost of treating privately insured patients, with profit margins sometimes in excess of 20 percent.
Finally, uninsured patients — also called “self-pay” patients — have effectively no market power at all vis-à-vis hospitals, especially when they are seriously ill and in acute need of care. Therefore, in principle, they can be charged the highly inflated list prices in the hospitals’ chargemasters, an industry term for the large list of all charges for services and materials. These prices tend to be more than twice as high as those paid by private insurers.
A fellow blogger clued me in on this report about why our medical bills are so high. I now have an electronic copy of this Time issue and plan to do several posts on it in the coming weeks. We have a major problem with out present healthcare system. We are currently spending twice as much as any other country in the world on our healthcare and actually more unhealthy and dying earlier than most.
It seems that most in Washington, especially the conservatives, want to solve our problem by denying care to those who can’t afford to pay the full bills. They want to reduce coverage for those on Medicare and Medicaid and want to repeal Obamacare; they say that will fix our problems. That and suggesting that people die early if possible. The Time article above shows us a very different scenario of the causes for our exorbitant spending.
I certainly hope that the results of this study are taken to heart by our legislatures. But since the article basically puts much of the blame on our hospitals and caregivers I doubt it will get much response from them. The medical lobbies in this country are among the strongest around; they spend millions every year to keep these sort of reports in the background of life.
The quote above is the crux of the problems that are further explained in the article. The guy that can afford it the least is the one to bear the brunt of hospital overcharges as they have no market power. While Medicare and Medicaid patients are “well served” as the quote says there are still many ways to reduce costs even further. The most obvious one that the Republicans in Washington so object to is the ability of that system to bargain with the drug manufacturers for reduced rates. That seems a no-brainer to me. It would reduce costs in those systems by several billion dollars every year. It is indeed a low hanging fruit in healthcare containment that has been left untouched because of lobbying power.
Somehow or another we need to convince our lawmakers and regulators to start looking at cost containment instead of service denial. I will be posting several more times about what this article found on “why medical bills are killing us”. I hope you will be as astounded by the facts as I am and possibly spurred to some sort of action.