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Wednesday, February 5, 2014

"Another Day Older and Deeper In Debt": The High Health Costs of Living

In 1955, Tennessee Ernie Ford sang "Sixteen Tons," a Merle Travis penned song with classic lyrics about the plight of the coal miner. I believe the lyrics now apply to the condition of the health patient. 

Some people say a man is made outta mud
A poor man's made outta muscle and blood
Muscle and blood and skin and bones
A mind that's a-weak and a back that's strong

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store 

"If medical inflation continues at the same rate as it has over the last 10 years, the average annual premium for family insurance in 10 years will exceed $30,000.

"The price of health care services is higher in the U.S. than anywhere else. We pay more for drugs, hospitalization, and physician services, and our administrative costs are among the highest in the world. 

"The higher prices that we pay are reflected in the profit margins of the health care industry. In the past 10 years, profits for companies in the health care sector increased by more than 175%."

(Maxwell J. Mehlman, J.D. "Why Does Health Care Cost So Much?" 2014)

Health care spending in the United States went from 4.7% of GDP in 1960 to 16% of GDP in 2009. The next highest-spending country is France, which spent 11% of GDP at that time.  If health care costs continue to suck down an increasing portion of our nation’s income each year, it will eventually become unsustainable. And, it makes the United States less competitive in the global marketplace.

Health care spending in the United States grew 3.9 percent in 2011, to $2.7 trillion, or $8,680 per person. Health care spending grew by the same rate in 2009 and 2010. 

(Centers for Medicare and Medicaid Services, National Health Expenditures 2011 Highlights)

Let's compare health care spending. In 2009, Norway, the next highest−spending country, spent only $4,700. Based on per capita GDP alone, the U.S. spends at least $2,500 more than it should on health care. 

(Hearing on Health Reform. Special Committee on Aging. U.S. Senate. Congress, 2009)

In a 2010 interview, billionaire investor Warren Buffett compared our increasing health care costs to a tapeworm. He told CNBC "everything we produce for export, everything we compete with . . . is bearing that cost . . . ."

So, what is the real culprit of the 
rising cost of healthcare? 

A 2005 poll by the USA Today/Kaiser Family Foundation/Harvard School of Public Health showed that Americans thought greedy pharmaceutical and insurance companies, and medical malpractice lawsuits were the most important factors contributing to the rising cost of health care.

But, according to a report by Elizabeth Davis of, those things are not the main culprits in rising costs. So, it seems Americans have been blaming the wrong sources.

Take malpractice for example. It is estimated by the Congressional Budget Office that the entire cost of the malpractice system accounted for only about 2% of the overall costs of health care.While malpractice crises, characterized chiefly by sudden, dramatic increases in malpractice insurance premiums, stress physicians and other health care providers, the economic impact on the health care system as a whole appears to be slight.

While there are many things that contribute to the rising cost of health care, one of them overshadows the rest.

A single factor causes half the rise in costs. I probably shouldn't get down to the nitty gritty but I have never been known for aplomb with prose, so here it is: People are just living too damned long. The "real culprit" is me as I age more and more.

Doctors and medical personnel can cure conditions that used to kill us, so now the costs to stay alive are killing our pocketbooks instead of simple natural selection killing our aging, frail bodies. New technologies to keep people alive longer cost BIG money. 

Guess who profits on the side of monetary gain. I'll give you a hint... they keep you and me alive.

(Elizabeth Davis. "The Cost of Health Care—Why Is Health Care So Expensive?" April 26, 2013)

Accounting for more than half the increase in cost, the single largest factor underlying rising health care costs is technological advances in medical care. Advances in medical technology are responsible for about 50% of the increase in the cost of health care.

For example the entire field of organ transplant medicine has evolved since the late 1960's. Now, if you are lucky enough to have a donor, hundreds of thousands of dollars later you have a new heart.

Of course, other technical procedures such as joint replacements have become commonplace in the past few decades. In addition, the entire field of recombinant DNA biopharmaceuticals has evolved since the 1980’s. For example, Davis reports Enbrel, an injection used to prevent the crippling effects of rheumatoid arthritis and ankylosing spondylitis, costs around $20,000 per year.

The cost of continuing to provide health care to someone whose life was extended by one of these new technologies is sky high. Davis says:

"Years ago there were nitroglycerine, oxygen, and morphine. If you were a 50 year-old man who had a heart attack, you weren’t likely to survive many more years because technology to adequately treat the disease didn’t exist.

"Now, you might be placed on a statin like Lipitor long before you have the first twinge of chest pain. Your onset of symptoms might be delayed for years. If you eventually develop symptoms, you can be treated with things like angioplasty, stents, and bypass surgery, potentially extending your life for decades."

(Elizabeth Davis. "The Cost of Health Care—Why Is Health Care So Expensive?" April 26, 2013)

Are Americans Getting Their Money's Worth?

But, here is the "kicker": Other countries with lower health care spending have been aging much more rapidly; in the U.S., 12.6% of the population is over 65, while the figure in Europe is 16.7%. The aging of the population explains why costs are rising, but not why costs in the U.S. are rising faster than in the rest of the world.

(Hearing on Health Reform. Special Committee on Aging. U.S. Senate. Congress, 2009)

Comparisons with other OECD countries show that patients in the U.S. get three times more ambulatory procedures than patients in other advanced countries; c−sections, knee replacements, cataract surgery, and revascularization procedures are particularly out of sync. High−cost diagnostic procedures such as CT scans and MRIs also are used far more frequently in the U.S. 

Most importantly, there is no conclusive evidence that the greater intensity of services translates into better health outcomes.

A major reason is the technological imperative, the desire by hospitals and physicians to offer the most advanced medical techniques, fueled by intense industry marketing efforts. Another reason is patient demand. 

But, the overriding reason for why utilization is so high is simply that it can be. It is difficult to dampen the intensity of services. One cause is “patient creep”—the tendency to provide high tech care to broader and broader populations of patients, including older patients and those with less severe symptoms.

Another cause is the lobbying power of organized medicine. When Medicare has tried to limit physician payments through the use of a mechanism called a “sustainable growth rate” (SGR), which is supposed to reduce physician payments across the board in the following year if total annual Medicare physician spending exceeds a certain limit, Congress has been prevailed upon to block the reduction and replace it with a payment increase.

 (Commonwealth Fund. International Health Systems Comparisons. 2007)

All of this, and still America does not score that well on a number of parameters, including infant mortality, coordination of chronic care, life expectancy, and avoiding preventable mortality and morbidity.

 OK, High Costs = 50% Technology, 
So How About the Other 50%?

What is to blame for the other 50% of high cost of health care. Just like we figured, much of the rest of the cost increases are due to increasing personal incomes and expanded health insurance coverage. Both of those factors create an increased demand for health care.

Wealthier people can afford more and better health care, so they use more health care. People who can afford the best health insurance are insulated from the burden of the true cost of health care, so they consume more health care. That, in itself, drives the market.

Then, there's waste, fraud, abuse, and obesity to blame. Here are a few things to consider:

* The U.S. Special Committee on Aging Hospital care in the U.S. is about twice as costly as in other industrialized economies.

* The McKinsey Global Institute estimates that U.S. drug prices are 50% higher than the average prices for other industrialized countries.

* U.S. physicians earn on average far more than their counterparts in other countries: twice as much as doctors in Germany and four times as much as doctors in the U.K.(20) The gap is even greater for specialists. 

(Timothy Jost. "Why Can't We Do What They Do? J.L. Med. and Ethics. 2004)

* The Hearing on Health Reform confirms average administrative costs for health care in the U.S. are 7%. Although some other countries with multipayer systems have similar costs, this is about twice the average in the industrialized world. We pay higher administrative costs in part because of the paperwork burden that results from the complexity of our system, and the profit margins of health insurance companies.

* In 2012, annual premiums for families covered by employer-sponsored health insurance were $15,745. Premiums rose 4 percent since 2011, but have risen 97 percent since 2002.  

(The 2012 Employer Health Benefits Survey, the Kaiser Family Foundation and 
the Health Research and Educational Trust (HRET), September 2012.)

* In 2010, 41 percent of adults (ages 19-64) reported that they had medical debt or trouble paying medical bills, and 22 percent had been contacted by a collection agency for unpaid medical bills.  

(The Commonwealth Fund Biennial Health Insurance Survey 2012, April 2013.)

The Bottom Line

When we, those who pay large premiums for inadequate health insurance, die, the write off of debt to doctors, hospitals, and other medical providers can be monumental. The deceased's estate is the only entity liable for those bills after death in the U.S. If the estate has no money and there are outstanding debts, medical or otherwise, the creditors must absorb the loss.

Health care collection statistics say the average recovery rate for hospitals is 11.3 percent.  

(ACA International’s Top Collection Markets Survey, Jan. 1 – Dec. 31, 2012.)

It is getting worse. As of 2012, 75 million people reported problems paying their medical bills or were paying off medical debt, up from 73 million in 2010 and 58 million in 2005. An estimated 48 million people were paying off medical debt in 2012, up from 44 million in 2010 and 37 million in 2005.  

(Press release, The Commonwealth Fund, April 26, 2013.) 

Of course, not paying overwhelming health care bills while still alive can result in serious debt collection problems.

According to a report published in The American Journal of Medicine, medical bills cause more than 60 percent of the personal bankruptcies in the United States and approximately three-fourths of those that do go bankrupt because of medical bills actually do have health insurance.

Why do well-meaning people acquire the inability to pay? If you have an illness that requires intensive care for an extended period of time, it is really easy to rack up medical bills that total over $1 million. And, at the same time, it is estimated that hospitals overcharge Americans by about $10 billion every single year.

I know financial assistance and payment plans are available. As you can see, most of America is suffering under outrageous costs of health care and health insurance. The truth is WE, the insured, are presented with "jacked up" costs and try to pay them off -- not very well as evidenced by the stats, but we do try.

Yet, WE, the insured, are continually hassled to pay in full while we already suffer the taxpaying burden of paying for those uninsured and on government assistance.

This is the "triple whammy" of the middle class on retirement and fixed incomes. It occurs because we are the population burdened with the entire cost. We have too much income for reduced charges or release of debt, so we must do this:

(1) Bow to overpricing by health care that attempts to recover more than necessary from us to compensate for those it is forced to treat who don't pay a dime for similar treatments,

(2) Pay increasing health insurance premiums that gut into our fixed incomes at a time in life when our age and declining health demand we use the health care system the most, and, thus, accept the fact that paying for insurance just makes us rack up more and more expensive bills, and

(3) Voluntarily declare bankruptcy to pay medical bills turned over to collection agencies and suffer the results that ruin our financial existence for what little time we have left on earth. In the meantime, the health care system won't even accept the allowances given them by our well-paid insurers as full payment to release us from continuous overcharging.  

I was recently told standard charges for office calls, procedures, hospital stays, and other medical services are across-the-board for SOMC associates. In other words, the amounts charged are required and the same amounts apply for all patients regardless of their sex, age, occupation, etc. Note please, I said "charged," not collected. In other words, some mysterious "lock" prevents competition between medical providers such as negotiated fees for services. I do not believe this "lock" exists.

Well, this is advice from

"You are not alone in seeking to resolve high or unpaid hospital or doctor's bills. Whether you have medical debt, unpaid healthcare expenses or you are proactively trying to reduce liabilities then you have come to the right place. When you are billed by a hospital, doctor, or any other healthcare professional don't assume the charges are reasonable and correct. Moreover, even if there are no errors and the charges are within the limits of the law, negotiation is another tactic that is very effective. Whether you can pay the bill or not, use our self help articles as a guide to get you started.

"Patients face many barriers in trying to reduce their medical bills including lack of negotiation skills, insurance restrictions, provider policy, reluctant doctors, and legal restrictions... Some of our partners specialize in negotiation because it is an effective process to reducing medical bills and debt... Understand that negotiation is always recommended but requires knowledge of insurance policies, medical procedures, and time."

I have come to the conclusion that aging costs too much money. The health care system is dedicated to running up debts on everyone, but especially on those who have retired with fixed incomes and health insurance. "Bleed them dry until they die" might be an appropriate battle cry for the system. 

The STRS (teachers' retirement system), the Medical Mutual Health Insurance Company, SOMC, docs and nurses and technology, and my deteriorating body all conspire against me. They demand I live, so they can get paid; thus, to keep a body with a pulse and an insurance card, they are determined to give me the best of care and get that high ranking on the Magnet survey. "Let's schedule more blood work, CT scans, tests, procedures, and referrals. By the way, we must charge extra to include you in each new system of records; otherwise, we can't keep an accurate track of your extremely high unpaid medical charges. We're doing our best to keep a paying client alive."

  "If conservatives get to call universal healthcare 'socialized medicine,' I get to call private, for-profit healthcare 'soulless, vampire bastards making money off human pain.'" 

--Bill Maher

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