7 massive problems with our health care system

A $21,000 bill for heartburn? Health care is bankrupting the country, and there's little we can do about it. Here's what caused this crisis.

By Kim Peterson Feb 22, 2013 3:27PM
The new American gold rush is at hospitals, where everything from X-rays to drug injections get marked up far beyond their actual value, Steven Brill of Time magazine reports in an amazing cover story out this week.

The prices we pay for health care are outrageous, and for those without health insurance, the costs are out of control. Consider the Connecticut woman who went to the hospital last year for chest pains only to find out it was a bad case of heartburn. She didn't have insurance, and Time reports that she got a bill for $21,000 -- $1,000 for the ambulance ride, $3,000 for doctors and $17,000 for a three-hour -- yes, three-hour -- hospital stay.
Her bill included charges for three protein-related blood tests at $199.50 each. Medicare would have paid $13.94 for each test at the same hospital, Time reports.

America spends 20% of its gross domestic product on health care. That's by far the most of any other country in the world.

How did things get this way? Why does medical help cost so much? Here are seven ways the system went off the rails:

1. No consistent pricing. Every hospital has an internal price list called a chargemaster, and none of those are consistent with each other, Brill reports. The prices keep going up almost automatically, a hospital executive tells the magazine.

2. Hospitals are consolidating.
They're also buying doctors' offices, which means they can have more leverage over pricing.Image: Surgeon with paperwork (Creatas Images/JupiterImages Corporation)

3. They use the expensive technology first. That heartburn patient received an $8,000 CT scan first instead of a regular stress test that the hospital bills at $1,200. Did the doctors need to go straight for the pricey stress test? By the way, the cardiologist reading that test charged $600 just to do that.

4. They test too much. Doctors in the U.S. run far more tests on patients than in other countries. One doctor describes it as "giving out CT scans like candy" in the emergency room.

5. They're scared of lawsuits. No one complains when a test ends up solving a mystery illness or improving medical care. But boy, doctors will hear about it if they pass on a test that could have helped. So doctors overtest to guard against potential lawsuits. "We can't be sued for doing too much," one doctor told the magazine.

6. We let it happen. As Brill noted when he went on The Daily Show this week, patients generally green-light the tests without knowing the costs and accept all of this because they have little choice. "You're an involuntary entrant into the marketplace," he told host Jon Stewart. "There is no marketplace in the most important sense of the definition, which is, does the buyer have any power at all?"

7. Congress is weak. The pharmaceutical and health care industries have spent $5.36 billion since 1998 on lobbying Congress, Brill reports. There's no better way to force the government to buckle under your will.

The 36-page Time magazine piece is one of the most important articles to come out in years. It's well worth a read.

More on moneyNOW



220Comments
Feb 22, 2013 5:19PM
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It went south when the government became involved.  It was 6% of GDP from the time they started measuring it until the birth of Medicare/Medicaid.  Now it is 18% of GDP and growing.

We have eliminated the FREE Market determining pricing and have left it to government.

Once again you cannot solve a government caused problem with more government, and not expect to be fleeced.

That is what has caused the crisis in healthcare.  And Obamacare will destroy what is left.  Already according to the CBO, 9% of those earning between 36K-90K have lost their employer healthcare coverage.   Under Obamacare look for many to be limited to 30 hr weeks, and many spouses to lose coverage,  if the employer doesn't exit the healthcare business entirely...

Enjoy...
Feb 22, 2013 5:11PM
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I think it should be renamed "Obama don't care"
Feb 22, 2013 5:07PM
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I told the hospital they were not being paid and to sue me if they didn't like it.  They called and I told them not to call again unless it was through a lawyer, they didn't.  My week in the hospital consisted of an hour of surgery to remove necrosis, then being injected with antibiotics.  They charged me $10,000. plus doctors etc.  Their billing to me was $7,400. until they turned it over to the credit bureau, when it was bumped by 50%.   Insurance was in place but they refused to pay because I had been attacked by brown recluse spiders at a motel, and they were contesting their payment.  I found a lawyer, and they would not take the case unless the doctors were willing to testify in support of their bills.  (The hospital and doctors flat refused, like it was beneath them.) One of the doctors sued me, and I won.  The hospital turned it over to a collection agency, and I told them the situation and if they continued, I would sue them also- they refused to backdown or consider the situation that they, the hospital, and doctors caused their own mess.

I held my own, took the hit in the credit report, and refuse to buy on credit again, or go back to that hospital or their doctors.  The U.S. medical system is corrupt and an abomination.

Feb 22, 2013 5:07PM
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Here's the real 7 problems with healthcare system (Note how the gov is directly responsible for most of them):

1: Medicaid
2: Medicare
3: Part D Prescription Drug benefits
4. Full-service health insurance inexplicably intertwined with employment benefits
5. Obamacare
6. Lawsuits, litigation, liability and sky-high malpractice premiums
7. The convoluted FDA drug approval process

Feb 22, 2013 5:04PM
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Obama Care the answer to all.  Coverage for all and controlled medical premiums.  As it is in it's last year before implementation the government is actually believing the GAO projections that were cast out by the Democrats to get it passed.  The system is in danger of collapsing under it's own weight if it is implemented.  The cost has doubled since passed and it is not even in force.  An additional tax of $63 per person per year is going to be implemented to help cover the cost.  The 3-1 ratio of lowest cost to highest cost is being reviewed and bills have been submitted to change it back to a 6:1 ratio.

The estimates of companies that will drop their sponsored health plans has doubled.  The amount of people who are going on medicaid is triple the estimates.  There is not cost control.  Premiums will rise this year and next on individual and group policies from 40-80%  The ratio of estimated people buying coverage without a subsidy or medicaid eligibilty which will be the backbone of the system is to low to support the system without raising premiums substantially or putting substantial tax increases on all people in place.  The amount of doctors in many area's is approx. 50% of those needed, with the AMA indicating of those 20% will retire in the next five years without replacements.  A whole new level of government ee's will take over jobs that are already being done by social services or insurance agents.  The cost of that structure alone is in the hundred of millions.  Last but least the new plans have been unveiled in CA.  If you are on a subsidy you get to choose one plan only.  The amount of co-pays plus out of pocket maximum will be greater than those covered can afford.  Medical insurance that cannot be used.

Feb 22, 2013 5:01PM
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There is an alternative to being bankrupt tending to a scheduled surgery; it's called "Medical Tourism" (check it out, it's for real). Surgical procedures and treatments here are so out of line with the rest of the world, that a few larger employers who pay their own medical expenses, and private individuals who have to foot the bill, are driving a budding new industry.

Say an un/under insured  patient needs a knee replacement - comparing cost, the USA has become so expensive that not only is it much le$$ in other countries for the same quality care, a patient can pocket substantial green, take their spouse with, and vacation there for a week or two before or recovering from the surgery! Ex; Knee Replacement Surgery = Total Price $5490 (includes implant, surgeon, hospital, everything). 
Feb 22, 2013 5:00PM
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Hospital bill for wife's knee replacement - 45,873 (that's just the hospital charges). That's the price an uninsured person would pay.

 

Blue Cross Blue Shield plan allowance - 2,700.

Blue Cross paid - 2,450

Patient copay - 250

Total cost 2,700 with insurance.

 

In what world does that make sense ?

Feb 22, 2013 4:55PM
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Obama and his band of academians failed to address the cost drivers in the Health Care System.  Without doing that first, how the hell do you lower the cost?  You don't!  That's what you get when you have a community organizer run anything more than the night shift at a 7-11.
Feb 22, 2013 4:53PM
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This happened to me last year.  My acid reflux was causing chest pain so I went to the emergency room not knowing what it was.  They did all kinds of tests and the end result was acid reflux and sent me home.  When I got the bill for $20,000 I was shocked.  My insurance told me that I was not liable for the bill because the hospital over reacted and did unnecessary tests.  Luckily I did not have to pay the bill.
Feb 22, 2013 4:48PM
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Congress isn't weal it's bought and paid for by the insurance and drug company's. Do you hear any of these company's complaining about  Obama Care? Nope! They are already written in the new laws. More money for them equals more PAC money ect. and more expense and less services for us. I believe in Capitalism but what we have now is so lop sided.
Feb 22, 2013 4:46PM
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My advice.....buy into a good Heath Care Mutual Fund with your IRA money....Vanguard Health Care comes to mind.

 

 

Feb 22, 2013 4:46PM
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Geez people,The new healthcare affordable care act hasn't even fully started.Not until 2014 will it fully be in effect.It will probably take 6-10 years to even honestly know if it's gonna work.Everyone is so into instant gradifacatiom it's sickening.I am gonna hold my judgement on the affordable care act until it's deemed to be a success or a failure.I won't make a judgement on it before it's even started........
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Right!  The COST of medical care - it's OUT OF CONTROL.  And this is the by-far greatest failing of "Obamacare".  Obamacare mandates that we all BUY insurance.  So that we ALL get to be part of the insurance-pool.  So that there are MORE premium - payers and many more who are healthy and thus of little or NO COST to INSURANCE COMPANIES.  This means bigger revenue and BIGGER PROFIT for insurance companies.

 

Notice that I keep mentioning INSURANCE.  Insurance is NOT medical CARE.  Obamacare does not provide or in any way ensure that more or all Americans get medical CARE.  It DOES attempt to ensure that health INSURANCE COMPANIES collect more paying clients and get more income.

 

Insurance companies in turn pay doctors and hospitals.  So the CUSTOMER of those medical care services - YOU - are hereby sidelined and disconnected from almost all of the usual market mechanisms seen in other goods and services.  YOU have no say = no choice in what care you get in most cases (article describes a case of this...) and NO SAY what-so-ever in what is CHARGED for these services.  So there is little "market control" over costs of medical care. Medical Care is a money-mill for providers.  Doctors and hospitals simply tell insurance companies they want more, and the companies are free to raise their premiums. YOU are of course NOT FREE and MUST pay the more.

 

And, under Obamacare, YOU, the BUYER (and consumer of med care services) have zero control or influence on any of this.

 

Obamacare is failing us - The biggest way is that it simply has ZERO COST CONTROL.  All it does is ensure that YOU get to pay insurance companies.  It does NOT put any limit on how much hospitals, doctors charge or get paid.  So.  Is anyone surprised to see that medical CARE cost is going UP and will continue to do so?  It will go UP until someone forces this growth to STOP.

 

Maybe YOU, the electorate, can do something to save your wallet...  elect folks to Congress with a STRICT COMMAND - an assigned JOB DUTY - to act NOW to put a stop to this.   And back this up - IF they don't do what YOU tell THEM TO DO, FIRE THEM.  No.  I don't mean say "we'll not vote for you again".  I mean - treat these politicians like they really are YOUR EMPLOYEES - IF YOU don't do what your boss told you to do, does he/she say let YOU get away with not doing your job and assigned duties?  I doubt it.   I'll wager YOU will get FIRED.  You know. The old PINK SLIP.  No pension, no cushy benefits, no watch, no plaque, no take-home prizes.  Just a YOU ARE FIRED slip.  Don't let the door hit you on your way OUT.

 

I know.  I dream of this!  Too bad YOU folks all don't actually CARE whether you get the chance to PAY for medical INSURANCE or GET reasonably-priced medical CARE.  If YOU DID, we wouldn't be having THIS thread!

Feb 22, 2013 4:44PM
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You are missing the point... hospitals HAVE to charge insurance (and you) large sums to pay for the deadbeats of society ie... the woman with HEARTBURN for and ambulance, ER, cat scan, bloodwork, Physician time, etc... NO health ins. Multiply this by literally millions and you get the point. Who the hell do you think is going to pay for all this "free" Obamacare??? You people drank the Kool-Aid, now deal with the diarrhea!!!  Dumbazzes!!!
Feb 22, 2013 4:39PM
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GOVERNMENT IS THE LARGEST ISSUE  IN ALL ASPECTS OF THE HEALTHCARE DEBATE.TORT REFORM HAS TO BE DONE --THE DEMS LARGEST CONTRIBUTOR THE ABA [AMER BAR ASSC]  IS WHY IT WON'T HAPPEN.THERE ARE MANY WAYS THAT OUR SYSTEM CAN BE BETTER EASILY  DONE WITH MARKET DRIVEN FORCES RATHER THAN THE BCRATES IN WASH THAT HAVE LITTLE KNOWLEDGE OF THE ISSUE .
Feb 22, 2013 4:38PM
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The American health care system is the greatest scam in the history of man and our national shame. Of course Obamacare will be a failure but what else would one expect when only the stakeholders under the current system are invited to reform it? It's like gathering a bunch of foxes to reform henhouse security.
Feb 22, 2013 4:33PM
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Regardless of how often people try to compare how great european socialized medicine is, they wont concede that exemptions already granted in the U. S. and 11 million illegals sucking  from the sytem renders any comparision invalid.

Imaging centers from NY to Houston, Detriot, Chicago etc are full of Europeans and Canadians paying out of their own pockets seeking tests and treatments they cant get at home. Thats all i need to know about government run health care. When all this started, I knew there woud be NO reform without the first step being tort reform.

Feb 22, 2013 4:32PM
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It's amazing and obscene that a lifetime of savings can be consumed by a week in a hospital.  The medical system is not fixable - there are no forces that can keep the prices from endlessly spiraling upward.  It has to be rebuilt from the ground-floor up.  There was a time in my recent past where there was no health insurance, and everything was paid out of pocket.  The virtue was, of course, that I could check on the pricing beforehand and I determined whether I really needed to see the doctor.  Because lawyers and CEO's and the administrative network weren't involved, prices were enormously less than today.  I realized then that I would be responsible for paying out of pocket any catastrophic illness or accident and I was willing to exist in that environment.  Perhaps healthcare itself should be eliminated and replaced only with insurance to cover the rare catastrophic event.   

Feb 22, 2013 4:31PM
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Somehow government intervention didn't make the top 7.  When the federal government thru Medicare determines what health care providers can be paid for treating the elderly, who are the largest bloc of consumers, providers have to make up the difference elsewhere.

Feb 22, 2013 4:28PM
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Rising Health Care Costs were the reason many people could not afford healthcare.  Insurance companies try to negotiate with medical providers on reasonable and customary charges but the provider doesn't have to accept the amount they're offered.  Showing up at an ER because you're bleeding to death etc is not health coverage and the hospital will sue you for the treatments provided so whomever says the poor and illegals can get "Free" care are ignorant.  The only way to corral the overcharging of medical services is to mandate the amounts that can be charged, make sure everyone has coverage so the provider doesn't take a hit for providing care and legal expenses going after the patient, and finally providing affordable coverage so insurance companies have a guideline to base their rates on.  It's not that Obama care has failed.  It hasn't really had a chance to do what it's designed to do.  Greedy corporations and right wing politicians and businessman want it to fail so they can get their guy in office next election.   Rising health care costs are not caused by Obamacare.  Whether Obamacare works or not has yet to be seen.  To say it's the cause of rising health care is rediculous since it hasn't even gotten out of the gate yet. 

 

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