The real cost of healthcare

Sean Pearson
Americans have known for a long time that healthcare costs in the United States are outrageously ridiculous. In many hospital settings, the biggest surprise following in-patient care is the bottom line on the bill. Why do items provided in the hospital cost what is beyond normal rationale? Why does a $4 plastic sitzbath cost $24? Why does an $8 donut cushion cost $35? If a washcloth costs $20, how inflated is a heart surgery? Why are these absurd charges tolerated? Who approves them? Who’s doing anything about it?
Apparently, no one. It seems we have just come to accept it as a way of life. Hospital prices are to the point where they are relatively meaningless, except to the handful of private pay patients hospitalized for care.
Medicare and Medicaid are the current big players and payers in the healthcare game. But they get off remarkably cheap in a healthcare world that charges them thousands less than someone paying out-of-pocket.
Earlier this year, The New York Times reported that a patient in Illinois was charged $2,712 for cataract surgery. Medicare pays $675 for the same procedure.
In California, a patient was charged $20,120 for a knee operation that Medicare only reimburses at $584.
And a New Jersey patient was charged $72,000 for a spinal fusion procedure that Medicare covers for $1,629.
How does this happen?
It’s really not too difficult to figure out. Hospitals have fixed price contracts with insurers like Medicare, Medicaid and private insurers. They are guaranteed payment, even though it is a fraction of what they charge. The only people getting bills with full charges are the uninsured and those wealthy enough to self-insure.
Ask any pharmaceutical company, and they will tell you it is entirely justifiable to charge $6 for a pill that costs them 11 cents to make.
Pharmaceuticals defend their costs by saying they have to invest in lab work and jump through governmental regulation hoops to create new life-saving medicines.
• In Nigeria and Ethiopia, $10 provides enough of a low-cost, off-patent drug to stop postpartum hemorrhaging after childbirth for five women. Thousands of women’s lives can be saved by making it available to traditional midwives through market distribution in developing countries.
• Sight-restoring treatment to poor patients in southern India runs $50 for laser surgery for one patient, or $100 for corneal graft surgery. One session of chemotherapy for a patient with eye cancer is $25. According to certified Lasik Eye Surgery providers in the U.S., the 2009 average cost for laser surgery is $1,800 to $2,300 – per eye. Prices for corneal graft surgeries in the U.S. run anywhere from $3,690 to more than $10,000.
• In VietNam, training health workers in emerging nations can provide them the necessary medical skills and clinic operations to treat their own people from their own resources. According to GlobalGiving.com, $200 trains one local health worker, who, in turn, provides healthcare for a population of 5,000 people.
And while these health workers obviously won’t be anywhere near as well trained as medical doctors, it helps to put our healthcare costs in perspective when we consider that the Association of American Medical Colleges indicates that annual tuition and fees at state medical schools in the U.S. in 2008-09 averaged $23,000 for in-state residents and $43,587 for nonresidents. At private schools, tuition and fees averaged $41,225.
Certainly we feel, in America, that we are entitled to the best healthcare available, and we’ll even pay extra for those with specialized training. But are we really getting our money’s worth when you consider the amount we have to shell out to maintain our “good” health?
If you don’t have insurance and are forced to pay out-of-pocket for emergency medical care or a surgical procedure, your two basic options are taking out a second mortgage on your home, or relying on the kindness of strangers who stuff $1 bills in cans bearing your name, health condition and plea for financial help at the local gas station.
Luckily – at least in Homer – people find ways to rally around someone in need by firing up the fundraising campaigns. But how much more spaghetti are we going to have to eat to keep our community healthy?
If we’re all looking at ways to individually cut our expenses, why can’t businesses and large corporations do their part to cut back, too?
Oh yeah. Greed rules.

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