Why is Health Care So Expensive?

So, I recently went to the dermatologist to have a small growth removed from my chest. The dermatologist took one look at it and said it wasn’t cancer, but still said he would send off for testing, which confirmed it was non-cancerous. The entire process took about 10 minutes. I got a bill for $400.

I was shocked when I got the bill, but when I told my friends and family they all just gave knowing nods. It seems that $400 for a 10 minute simple procedure is a normal cost. $300 for the procedure itself, another $100 for the testing.

It’s just interesting because I don’t quite fathom why it’s so expensive. Maybe a lot of it has to do with the way we as a society treat health care in general – it’s not something in which you never really see a business price compete on. I’ve never see a sign outside a dermatologist’s office saying “Get your moles removed for half the price!!!”

I suppose this might be because a lot of people don’t actually pay for their health care costs marginally – they prepay for the majority of their costs through insurance, so it doesn’t really matter what the marginal cost of any given procedure is. Still, one would think that the insurance companies themselves would be able to negotiate a better rate than what ends up getting charged.

For those scoring at home, I do have insurance, but it’s shitty insurance with a $3,000 deductible that my $400 comes nowhere near meeting. I have met it once, when I got beat up a few years ago. Sometimes I think it’s not even beneficial to have insurance in situations in which you aren’t meeting your deductible though since it seems most of the medical profession don’t take any cost considerations into mind once you hand them an insurance card. I mean, when I got beat up a few years ago, no one came to me and said “Ok, we can run a CT scan and other tests, but it’s going to cost you $6,000.” I never really agreed to any of the procedures, instead they just sorta swept me away and then handed me a $6,000 bill, $3,000 of which I was liable for. I realize I was ignorant not to even ask about costs, but still, I feel like there’s no other industry in which that would be an acceptable standard.

So, anyway, my question goes to you, my fellow diarists: Why is Health Care so expensive? Is it just that expensive to pay back someone who had to go through the trials of med school? Or to pay for all the newest technology? If you had the option of paying less, but using a less expensive and sophisticated technology for testing, would you do it?

site meter

Hey, don’t knock the doctors. We don’t see even half of that $400. You can look at the costs that health supply and pharmaceutical companies put on their products, the cost of malpractice insurance, and the reimbursement that hospitals/practices get from insurance companies (or medicare or medicaid), and you’ll see why a procedure like that costs $400.

curious dave

November 17, 2012

I had a procedure like that done and have no idea what it cost, as the insurance company got the bill. But, as you say, they should have some clout to negotiate prices (and they do. Typically providers ask for X and they get X’ < X, at least if it’s an HMO/PPO situation, where the provider & payer have pre-existing agreements.) Part of the Affordable Care Act was cutting medicare paymentsto providers, but Romney denounced it as “cutting medicare benefits”. But I suspect certain supplies are very expensive. Also, treatment of indigent patients is expensive and needs to come from somewhere (usually, I understand, from hospitals). Cost of litigation / malpractice Insurance is no doubt another factor. But I’ve never really analyzed it. I think Affordable Care Act is an improvement but still poor as a “system.” I’m told Canada’s is not bad. There was a scandal here recently when it was revealed that a scorpion-bite antivenom that is $100 a dose in Mexico was administered to a patient in a US hospital who was charged $14,000 or some such for it. Why/how ever that was probably contains part of the answer to your question. Davo

http://www.azcentral.com/business/20111110scorpion-drug-cost.html Davo

Yours For Now...

I don’t know. Why is my birth control $50 WITH insurance ($80 without) PER PACK, but only $21 per pack through Planned Parenthood with no insurance? I feel like I go to the doctor so infrequently that it’s not even worth having insurance. I don’t currently have insurance, I’ll get some in December, and it will be Blue Cross Blue Shield and I’m excited to have REAL insurance. ~I’ll be

IceGurlie

Oh, insurance companies DO negotiate! My first big exposure to the wonderful world of healthcare was eight years ago when my father had a high tech procedure for a type of benign brain tumor. He almost fell over when he saw the bill. The funniest part of the bill was where the hospital said the cost was X and the insurance company came back and said, “Um, yeah, that procedure should really be (X/2)-Y!” If he didn’t have insurance, he would have been expected to pay X. But having insurance dropped the cost of the procedure (not just what he was expected to pay out of pocket, the WHOLE procedure) by more than half. I assume, as a libertarian, that you’re appalled by the notion that the government should be able to force/coerce you into having health insurance.

I work in healthcare and I formerly worked for a health insurance company. The cost of that procedure was not that unusual. First – the medical supplies are ridiculously expensive. The reason for that is because there is no substitute. The suppliers all keep prices within a certain range because they can get what they want. You need sterile supplies, so you HAVE TO buy them. The other part isthe cost of running a medical office. There’s rent and utilities, advertising, etc. Plus, the salaries of employees. The receptionist didn’t participate in your care but she still needs to be paid. As does the medical assistant, the biller, etc. Then, there’s the malpractice insurance. It costs a LOT. For good reason. Any time someone has a problem, they are looking for a payout. Lawyers like to chase ambulances. Most doctors make pretty good money but it is one of the professions where I feel it is earned and deserved. They are healing people and saving people in a lot of cases. They’ve earned a medical license and that’s no easy task. I think they deserve to make a better than average salary. $400 IS a lot of money. But compare that to how much money you’ve spent on

unneccessary things like cell phones, entertainment, restaurant meals, etc, and that amount really isn’t much. What’s really more important? Health, or material things?

The one thing that does bother me about healthcare, though, is the fact that a doctor will accept a certain amount from an insurance company – say $300 for that procedure. But if you have no insurance, they’ll charge you the full $400. THAT doesn’t seem fair to me.

heatherette

November 19, 2012

Why are you so cute?

I’ll be your nurse, and I won’t charge you a thing, how’s that for service?

RYN: Reid will most definitely finish the season. I just don’t see Jeffrey Lurie growing a pair and firing him in mid-season. He’s given Reid lots and lots and lots of leeway over the years. I can’t imagine him canning the guy until the off-season. It will be a happy day for me, as I’ve been screaming at my TV for him to fire Andy Reid for YEARS now!

November 20, 2012

I think you should write an article about how our Education system is essentially at a standstill (or possibly digressing?). Yes, what do you have to say about the American education system? Also, I like Dave more than you because he answers my questions.

Revlis

All I have to say is: $400 IS that much to a lot of people – particularly those working close to/minimum wage, who are, incidentally, the people who are least likely to have insurance. Obviously health is more important, but I don’t think that what poor people (are able to) spend on (relatively few) material things comes close to matching the costs associated with health care.