Cancer Journal #4
Cancer Journal #4-a
Health care costs a lot. The meter rolls at an alarming rate—at least according to the monthly statements I get and the meter will only speed up as the bills for my current treatment rolls in. Not out of my pocket, of course. Medicare and my Medicare supplement policy cover all but relatively modest drug co-pays but still, if those statements reflect the value of what’s being done for me, I find it all a little distressing.
I’m retired. My children are grown. My life’s work can, in most respects, can be called finished. I get to enjoy the pasture. But look at the doctor’s bills and it is high priced pasturage. I see a misallocation of resources. More should go to my grandchildren's education and well-being and less to extending the life of the old horse whose plowing days are over. But then, at least on an individual basis, there’s another way of looking at it.
Cancer Journal #4-b
Back when I was college, I took a course on regulated industries—utilities, railroads etc. The thing that has stuck with me is that business has fixed costs and variable costs. Fixed costs are those that are constant, regardless of fluctuation in customer usage.
For the railroads, the fixed costs would be buying the land the track is laid on, construction and maintenance of the tracks, purchase of engines, freight and passengers cars, fuel etc. There is no change in these costs regardless of whether the train has 30 or 60 passengers.
For the railroad, the variable costs would be negligible in most all instances. For the passenger, the paper the ticket is printed on, the extra time the conductor spends taking the ticket—even that wouldn’t count since he is on the clock anyway. Nearly all the price of the fare goes to covering the fixed costs of the railroad. The fare increases the size of the pot of money used to cover those fixed costs or else to boost the profits of the railroad. A lot of people use the train and that should keep the fares low.
I see my health care provider as being like the railroad company in that a disproportionate share of their costs are fixed. Paying for their really nice buildings and high tech diagnostic equipment, the salaries of professional and tech staff. Those costs are going to be the same whether I am sick or well. Even the medication I take is largely a fixed cost, covering the research and development of the drug. The cost of stamping out the extra pills that I as an individual take has to be very small.
Now, none of this proves that there is no misallocation of resources but it’s a misallocation in the aggregate, not on an individual basis. There’s a lot of old horses in pasture who get sick and who create a demand for health care the health care system spends a lot of money to meet. And in among the old horses are some young people who may have a long and productive life ahead of them if their condition can be successfully treated. I could be helping to pay the cost of treating a young scientist who will develop a system for successfully sequestering atmospheric carbon if only this cancer thing can be beat. Where’s the misallocation in that?
Some of the that large bill is administration costs of paying that bill. In the U.S. we have many different insurance companies, all staffed to process bills. To me, a single payer insurance program makes sense. And the system is rigged against those without insurance. If you have insurance, you end up paying less because costs have been negotiated between the provider and the payer. Without insurance, you end up footing a much larger bill. When I receive my medicare statements, I am amazed at the discrepancy between what is charged and what medicare pays.
ReplyDeleteAnother thought: more emphasis on preventative care would reduce medical costs in the long run. It is especially important that babies and children receive good care because that can prevent expenses down the line.
My doctor was on the billing executive committee for Marshfield ...he once said the pricing game is to charge more than needed or expected and for medicare to pay what they believe is a true value.
DeleteThen because the billed prices are so much higher they continue to adjust future payments up
.. the key word is "game" I believe.
Just remember Charlie
... the old horses have a higher value than you are making out... They still offer much. Aside from their continued contributions there is a lot of love on the line to still return to society and their village.
We in Charlie's village daily send energy to him to strengthen his resolve..
We have places to go and vacations to take Charlie... stay strong.
It's a lot to consider.
ReplyDeleteWe are holding you in our hearts, Uncle Charlie. Every day.
Yes, working at a medical clinic and dealing with the insurance companies was certainly eye-opening for me. The provider had a contract with each insurance company as to the amount she could charge for a particular procedure. There were also many hoops to jump through. For example, one company required patients to, at the beginning of each calendar year, complete a form saying they weren't seeing the provider for injuries after an accident, which they didn't cover (this was chiropractic). But patients often never got notice they were supposed to do so and that left it to us/me to contact them, explain it all, and try to urge them to complete it (usually long after they'd been treated) so the provider could get paid.
ReplyDeleteIt sure seems to me it should be so much simpler, and more fair.
In another case, one insurance company hired another company to determine if each claim would be paid or not. So we were supposed to send the claim to this hired company too. But, if the original claim wasn't in their computer exactly at the same time as our information arrived, they simply deleted it! After many calls to the insurer about this, I finally got a supervisor on the line, who authorized a way for me to make sure the hired company had all the info they needed to pay. Argh! I could tell you many stories! :)
ReplyDelete