Why Health Care is Broken

Over the past few years it has become abundantly clear to me that the health care system in America is fundamentally broken. What we have tried to do as a country is build our health care system on capitalist principles. On its face there’s nothing wrong with that approach, if – and this is a BIG if – there are safeguards in place to prevent rampant greed from posing what has come to be called “systemic risks”. What the financial crisis has taught us, if nothing else, is that without sufficient regulation and oversight, a capitalist system that allows greed to run amok is eventually going to break down. And that is precisely what has happened to our health care system.

Capitalism functions on the premise that consumers have a choice over where to spend their money and competition exists to keep prices reasonable. But in the case of a necessary medical procedure, you just can’t call around to get the best price for what needs to be done. Instead you go into a hospital or doctor’s office, have a treatment and then get the bill. The provider basically gets to charge you whatever they want, and there is no real competition to keep prices down.

Here is an interesting example. About a year ago my wife had some pre-natal blood work done. For one reason or another, our insurance company would not cover the procedure. Not only would they not cover it, but they would not even give us an EOB (explanation of benefits) stating the amounts we are required to pay based on the rates that the lab has negotiated with the insurance company. The lab charged us about $1000 for the blood analysis. However, I found out from my current insurer that the price reimbursed to them would have been just $200. That’s a 500% markup for people without proper health insurance! Of course, with health insurance we would pay even less than that.

Then last November I went to the ER complaining of stomach pain. Eventually my doctor ordered a CT scan. The price of the scan to someone without insurance? $6000 for a 6 minute test – that’s $1000 per minute! The price to someone with insurance? Just $1000, one sixth the cost.

This is just sheer insanity, the result of unbridled greed. And the system which allows that greed flourish unabated is just plain broken. The main problem we face now is that premiums for health insurance are so high that companies either stop offering it to their workers, or only offer to cover you and not your dependents. That’s my situation currently, and it costs me about $12,000 per year just to cover my wife and two kids.

But what happens when you can’t afford it, or when you’re laid off? If you get caught without insurance and need even non-critical medical care, you’re screwed, plain and simple. A visit to ER will probably set you back several thousand dollars.

Before you throw your hands up in despair and say there’s no other way, know that it doesn’t work this way in most other countries (say in Canada, France or Great Britain). Yes, the government is involved and there are inconveniences. But we’re reaching the point when it doesn’t matter anymore. If things stay the way they are now, hardly any of us will be able to afford health insurance and will face financial ruin in the event of an illness or accident.

The moral of the story? If you don’t have health insurance now, don’t walk but run out and go get some, even if it’s not worth the paper it’s written on. Why? Because even if the insurance won’t cover a procedure, you will pay the negotiated rate between the hospital and the insurance company. Otherwise, you’ll get gouged in a way you never imagined.

About Tony Sneed

Married with three children.
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4 Responses to Why Health Care is Broken

  1. Robert Williams says:

    Very good article, and basically hit the nail on the head – with one exception. In Canada, it can take many months to actually years to get assigned a primary care physician. Without one, you can not get care. Many Canadians are now coming to the U.S. for medical care, and even carrying U.S. medical insurance.

    From my personal observations, New Zealand has the best government-provided health care, and it supposedly costs them about $2,000 a year to run, as opposed to Medicare, which supposedly costs over $7,000 a year.

  2. Tony says:

    I’m not saying that we should necessarily mimick the health programs of other countries. But we should look at what other countries are doing as we fashion our own approach, while learning from the mistakes of others.

    The thing I find disturbing about the current debate is that it is focusing on health insurance more than the crazy pricing of health care services and how the system is setup to prevent true competition. Notice how I avoid the term “cost.” Prices aren’t driven primarily by cost, but by profit-motive. The system is in need ofa radical restructuring so that the price of health services is not so tightly bound to profit motive. I don’t hear very many people talking about that.

  3. Jon Flanders says:

    Robert – I’m curious where you get your information. Do you have references to back that up?

    Certainly in Canada and the UK “elective” things something take longer than in the US (one of the reasons Canadians come to the US).

    OTOH many american’s are considering moving to Mexico for health care – http://rawstory.com/blog/2009/09/americans-migrating-to-mexico-over-health-care/.

    I’m not suggesting Canada is perfect – but they certainly do better than us (spend less and having a better standard of living).

    Since you brought up Medicare – its interesting to note that Medicare has less overhead (non-medical costs) than private insurers in the US.

  4. Shannon Ahern says:

    Your first responder is wildly misinformed. There is no “assignment” of a primary care physician, therefore there is no “wait”. I am from Toronto, and have lived in Los Angeles for over 30 years. I know what I am talking about! There’s NO WAIT for critical care or routine care. Some procedures that are non-critical have a wait, which most Canadians find totally reasonable, considering the overall quality of what they are getting for their tax dollars. Which, BTW, if you do the math, always is less than extortion companies here is the US charge. If you don’t think so, then you probably have employer health benefits and the true costs are hidden to you. (Until, that is, the employer decided they can’t afford it anymore and you become uninsured!)

    My husband and I waste $16K annually just getting the “paper” discussed in this blog. Even WITH the pathetic “insurance” here, we still pay over $300/month for prescriptions!

    When I am visiting at home in Ontario, I just call up the doctor of my choice and make an appointment! My mother was kept alive for over 30 years by the wonderful staff at Princess Margaret in Toronto as she valiantly fought cancer. AND SHE OWNED A HOME. Try that here (unless you are already independently wealthy!).

    If my husband or I ever get seriously ill, even with our “insurance”, we will surely lose our home.

    Americans should really watch this video. It’s not fake. It could be ANY OF MY FAMILY MEMBERS in Canada. It’s the way I have experienced health care over my lifetime, and Americans need to learn to do math. 🙂

    http://ushealthcrisis.com/2009/09/real-canadians-talking-real-health-care/

    Cheers!

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