USA Health Care Costs

[ElNono]

Why are the prices SO much higher here? Have you seen the cars doctors drive, and the houses they live in? Hospitals and labs here upgrade equipment quite often when it becomes available - "CT Scan" from a 15 year old machine is not the same as one from a new, state of the art model. MRI's even more so.

Just a thing or two I want to point out here:
1) The CT Scan machine we used in a third world country not 2 months ago was no different than the one our doctor uses here in the US.
2) MRI technology is over 30 years old. As with any technological product, the cost of the actual technology to build these machines has come down substantially over the years. However, when you have a cash cow making you $10,000/hour, it's not that hard to see why you don't want to pass the cost savings to the patients.

In a way, we already have 'price controls'. The difference is that we're fixing prices UP. If these charts are not an indication of that, I don't know what it is.

I will agree with you that the proposed reform is not the answer. But some sort of regulation has to take place here, IMHO.

[101A]

Just a thing or two I want to point out here:
1) The CT Scan machine we used in a third world country not 2 months ago was no different than the one our doctor uses here in the US.

Fair enough; never been overseas to a 3rd World country; I know my daughter got a CT scan earlier this year; and the unit was shiny-new (lab tech confirmed it)

2) MRI technology is over 30 years old. As with any technological product, the cost of the actual technology to build these machines has come down substantially over the years. However, when you have a cash cow making you $10,000/hour, it's not that hard to see why you don't want to pass the cost savings to the patients.

"Open Sided MRI, etc" - we've all seen the ads. Anyway, those are in labs/hospitals; owned by corps and docs, or teams of docs. No doubt they are profitable. Do we lose anything by forcing it to be less so? I don't know - common sense would suggest we would; however, evidence from other countries suggest not so much.

In a way, we already have 'price controls'. The difference is that we're fixing prices UP. If these charts are not an indication of that, I don't know what it is.

Whose doing the fixing? I have been involved in contract negotiations with hospitals, clinics AND providers. Trust me, we are NOT in cahoots when we are in those negotiations; we are trying to get every ounce of skin we can from them. Our primary negotiating point is our "book" of business - the number of people we have that we can steer to, or away from a provider.
Docs and hospitals will only come down so far - there is a bottom price below which they won't go. In the end, our contractual prices come in right around where all the insurance carriers do (we compare them with receipts paid for by the United HealthCare, Blue Cross, etc....). When you say "fixing up" - who, in your view, is fixing them "up"? From my point of view; we are doing everything we can to keep the providers honest; but it is the insurance industry that is MOST vilified - when we cut back a provider for gouging; the story isn't "the provider charged too much"; it's that the "Insurance wouldn't pay"!

I will agree with you that the proposed reform is not the answer. But some sort of regulation has to take place here, IMHO.

Absolutely. But, again, until our politicians nad up and actually address the real problems of health care expenses; nothing is going to be fixed. They are not so stupid as to not realize this. Which means they don't REALLY care about costs. So what are they doing?

[101A]

Regardless of the real reasons...the bottom line is it's sickening. The majority few is reaping huge benefits while only providing equal and in some cases less effective care.
This is where I would be a proponent of government regulation. But still not a proponent of government control.

Do you believe our government can effectively regulate quality of care?

How would it do that?

[SpurNation]

Do you believe our government can effectively regulate quality of care?

How would it do that?

Not effectively regulate "quality" of care. More so regulate costs associated to quality care.

I'm not an expert as some and probably even you are in this forum. As an individual (recipient), I can only accept the charges initiated by the medical field. I don't have a choice to garnish a better price. The only choices I have is whether I can afford medical care or not. Unfortunately not because I don't have a choice.

But I think there might be overwhelming proof that costs are esculated in this country as compared to nations that provide the same types of medical services. What are the compelling stats that warrant such expense if the realms of care are the same as those who provide care at much lower rates?

The only answer that I can equate is over pricing and nonregulation of associated cost to provide.

If I'm wrong...then it really doesn't matter. Business as usual in the medical field as well as the esculated problems associated to rising cost.

[ElNono]

Whose doing the fixing? I have been involved in contract negotiations with hospitals, clinics AND providers. Trust me, we are NOT in cahoots when we are in those negotiations; we are trying to get every ounce of skin we can from them. Our primary negotiating point is our "book" of business - the number of people we have that we can steer to, or away from a provider.
Docs and hospitals will only come down so far - there is a bottom price below which they won't go. In the end, our contractual prices come in right around where all the insurance carriers do (we compare them with receipts paid for by the United HealthCare, Blue Cross, etc....). When you say "fixing up" - who, in your view, is fixing them "up"? From my point of view; we are doing everything we can to keep the providers honest; but it is the insurance industry that is MOST vilified - when we cut back a provider for gouging; the story isn't "the provider charged too much"; it's that the "Insurance wouldn't pay"!

I think the system itself is perverse and molds itself to lack of transparency and control. Service provider bills $xxx for service to insurance, insurance co pays a fraction of $xxx to provider. Completely detached from that, same Insurance Co collects $yyy from employee paychecks.
Obviously, there's always a risk that the pool of $yyy money is not going to cover the fractional $xxx paid out, but one would have to assume that such risk is quite overestimated by simply looking at the profit margins on these companies.

I'm not suggesting that they don't fight for customers against each other, but if both of them are overestimating risk (and then we would have to sit down and find out the reason of why you would overestimate like that), then you're really selecting between stinker 1 and stinker 2.

I also don't discount service providers jacking up the bills. But I also think this is a byproduct of the insurance co basically paying whatever they deem for the service.

I don't necessarily vilify the insurance co for trying to fight down prices against providers. I do question their their motives to do so though.
At the end of the day they're a for-profit enterprise, having to talk to shareholders. Their customer-savings are entirely a secondary concern.

Absolutely. But, again, until our politicians nad up and actually address the real problems of health care expenses; nothing is going to be fixed. They are not so stupid as to not realize this. Which means they don't REALLY care about costs. So what are they doing?

It's not that complicated to see what they're doing. They're listening to their cons uency telling them that this current system is bull . They definitely have absolutely no clue what to do to fix it, and because of that, they're most likely going to make it worse before they make it better.

[101A]

I think the system itself is perverse and molds itself to lack of transparency and control. Service provider bills $xxx for service to insurance, insurance co pays a fraction of $xxx to provider. Completely detached from that, same Insurance Co collects $yyy from employee paychecks.
Obviously, there's always a risk that the pool of $yyy money is not going to cover the fractional $xxx paid out, but one would have to assume that such risk is quite overestimated by simply looking at the profit margins on these companies. I'm not suggesting that they don't fight for customers against each other, but if both of them are overestimating risk (and then we would have to sit down and find out the reason of why you would overestimate like that), then you're really selecting between stinker 1 and stinker 2.

My company is not allowed to make money on risk; we are not an insurance company; we process claims for self-insured employers; I have no incentive to "overestimate" costs; I get paid an administrative fee for what my company does - that's it. One of our principal functions each year is to estimate how much a company can expect to spend in the upcoming year on claims. (that is what actuary's for those of you following along). The actuary's are VERY good at what they do - on any group over 100 employees, they are going to be with 1 - 2% percentage points 90+ % of the time. It is amazing, frankly. AND - our actuary's are in line with the big insurance carriers actuary's most of the time. There is not "fluff" or inflation in the numbers.

Now, that doesn't mean there isn't plenty of fat in administrative costs themselves - there is. Not the least of which is the cost of negotiating and then "repricing" charges after they are incurred. I've mentioned several times on the forum that, not so much regulating prices, but making them transparent, published and uniform for all customers of a respective provider would be a good step in reducing administrative costs of claim's processing, AND allowing market forces to get some hold of costs.

I also don't discount service providers jacking up the bills. But I also think this is a byproduct of the insurance co basically paying whatever they deem for the service.

What the insurance company pays is based on contractual pricing agreed to by the company and the provider - it is not arbitrary, and is not set solely by the insurance carrier. It is negotiated.

It's not that complicated to see what they're doing. They're listening to their cons uency telling them that this current system is bull . They definitely have absolutely no clue what to do to fix it, and because of that, they're most likely going to make it worse before they make it better.

Most polls do not show "healthcare" as that high of a priority for most Americans, yet our politicians are making it THE priority right now. I would suggest, also, that that focus of politicians and media is having a wag the dog affect, as well, inflating healthcare's prominence. If that wasn't happening, it would be EVEN lower. Beyond that; in several polls MOST Americans are happy with their own insurance/health care coverage - they want their's left alone. Politicians are NOT listening to their cons uents on this at all.

[SpurNation]

My company is not allowed to make money on risk; we are not an insurance company; we process claims for self-insured employers; I have no incentive to "overestimate" costs; I get paid an administrative fee for what my company does - that's it. One of our principal functions each year is to estimate how much a company can expect to spend in the upcoming year on claims. (that is what actuary's for those of you following along). The actuary's are VERY good at what they do - on any group over 100 employees, they are going to be with 1 - 2% percentage points 90+ % of the time. It is amazing, frankly. AND - our actuary's are in line with the big insurance carriers actuary's most of the time. There is not "fluff" or inflation in the numbers.

Now, that doesn't mean there isn't plenty of fat in administrative costs themselves - there is. Not the least of which is the cost of negotiating and then "repricing" charges after they are incurred. I've mentioned several times on the forum that, not so much regulating prices, but making them transparent, published and uniform for all customers of a respective provider would be a good step in reducing administrative costs of claim's processing, AND allowing market forces to get some hold of costs.


What the insurance company pays is based on contractual pricing agreed to by the company and the provider - it is not arbitrary, and is not set solely by the insurance carrier. It is negotiated.

Interesting stuff. Would be great to surmise what percentage actually goes to paying for medical treatment as compared to administrative salaries.

[101A]

Interesting stuff. Would be great to surmise what percentage actually goes to paying for medical treatment as compared to administrative salaries.

No guessing necessary:

Claims processing: About $18.00 per month per employee
Network Contract: About $4.00 per month per employee
Large Case Management: About $1 per month per employee
Rx network and administration: About $5.00 per month per employee

That's for my company - and we are usually about 20% below what an insurance company gets for administrative fees. Executive (ownership) compensation amounts to about 5% of our revenue; but I'd like to think we earn at least some of our money.

[Höfner]

I want my "free" healthcare damnit

[spursncowboys]

Not effectively regulate "quality" of care. More so regulate costs associated to quality care.

I'm not an expert as some and probably even you are in this forum. As an individual (recipient), I can only accept the charges initiated by the medical field. I don't have a choice to garnish a better price. The only choices I have is whether I can afford medical care or not. Unfortunately not because I don't have a choice.

But I think there might be overwhelming proof that costs are esculated in this country as compared to nations that provide the same types of medical services. What are the compelling stats that warrant such expense if the realms of care are the same as those who provide care at much lower rates?

The only answer that I can equate is over pricing and nonregulation of associated cost to provide.

If I'm wrong...then it really doesn't matter. Business as usual in the medical field as well as the esculated problems associated to rising cost.

I don't believe, in the past 60 years, our Government has ever regulated cost proficiently. Whenever they try, they fail.

[ElNono]

My company is not allowed to make money on risk; we are not an insurance company; we process claims for self-insured employers; I have no incentive to "overestimate" costs; I get paid an administrative fee for what my company does - that's it. One of our principal functions each year is to estimate how much a company can expect to spend in the upcoming year on claims. (that is what actuary's for those of you following along). The actuary's are VERY good at what they do - on any group over 100 employees, they are going to be with 1 - 2% percentage points 90+ % of the time. It is amazing, frankly. AND - our actuary's are in line with the big insurance carriers actuary's most of the time. There is not "fluff" or inflation in the numbers.

And I have to assume you tack up whatever you want your profits to be to that? Along with your administrative costs. I mean, I'm sure you don't look to break even at the end of the period, but actually make some money, right?

Now, that doesn't mean there isn't plenty of fat in administrative costs themselves - there is. Not the least of which is the cost of negotiating and then "repricing" charges after they are incurred. I've mentioned several times on the forum that, not so much regulating prices, but making them transparent, published and uniform for all customers of a respective provider would be a good step in reducing administrative costs of claim's processing, AND allowing market forces to get some hold of costs.

I'm all for a more transparent system. I think the fact that there's so much fight to keep the system opaque as it is speaks volumes of the abuses taking place.
The bottom line is that we're paying a whole lot more than in other places for the same service, so SOMEBODY at some stage in the chain from provider to patient is pocketing a lot of bucks.

What the insurance company pays is based on contractual pricing agreed to by the company and the provider - it is not arbitrary, and is not set solely by the insurance carrier. It is negotiated.

You and I know that if you pretend to run your average healthcare business you need to take insurance patients. It's simply not an option. Which automatically implies you have little to no wiggle room to negotiate.

Most polls do not show "healthcare" as that high of a priority for most Americans, yet our politicians are making it THE priority right now. I would suggest, also, that that focus of politicians and media is having a wag the dog affect, as well, inflating healthcare's prominence. If that wasn't happening, it would be EVEN lower. Beyond that; in several polls MOST Americans are happy with their own insurance/health care coverage - they want their's left alone. Politicians are NOT listening to their cons uents on this at all.

Health is always a priority. I don't care how healthy you are, sooner or later it's going to affect you. And it already affects a lot of people daily. You don't need a poll to tell you that.
And again, the claim that most americans are happy with their coverage works for people that actually have coverage. With about 40% of americans uninsured or underinsured, that claim is really in the minority, not the majority.

[101A]

And I have to assume you tack up whatever you want your profits to be to that? Along with your administrative costs. I mean, I'm sure you don't look to break even at the end of the period, but actually make some money, right?

My profit is whatever is left after I meet all expenses (my salary is an expense, btw) - and I do not get to set it wherever I want. My brother and I get paid LAST, not first.

I'm all for a more transparent system. I think the fact that there's so much fight to keep the system opaque as it is speaks volumes of the abuses taking place.
The bottom line is that we're paying a whole lot more than in other places for the same service, so SOMEBODY at some stage in the chain from provider to patient is pocketing a lot of bucks.

AVERAGE surgeon SALARY is over $500,000 - private hospitals are doing pretty well, insurance company execs aren't in the poor house; I'm doing alright, etc. etc..... There is SO much money in the system that there are a lot of people making a good living within it; there are also a lot of basic jobs (clerical/sales/administrative) provided throughout the industry, as well.

You and I know that if you pretend to run your average healthcare business you need to take insurance patients. It's simply not an option. Which automatically implies you have little to no wiggle room to negotiate.

True, all insurance plans basically pay within a few points of each other; few have a great compe ive advantage; my point was, however, that the insurance carriers do not arbitrarily set payment amounts, they pay based on contractual obligations

Health is always a priority. I don't care how healthy you are, sooner or later it's going to affect you. And it already affects a lot of people daily. You don't need a poll to tell you that.
And again, the claim that most americans are happy with their coverage works for people that actually have coverage. With about 40% of americans uninsured or underinsured, that claim is really in the minority, not the majority.

Haven't seen anything like the 40% number. You got a link?

[TeyshaBlue]

According to the latest numbers from the CBO, you can substract 2%.

http://www.dayontorts.com/tort-refor...-lawsuits.html

I'm surprised it's that much.

[Wild Cobra]

You can see from the OP what price controls do for you (Medicare is right in line with global pricing. That said, the price paid by private industry is probably getting some of that cost shift.

There's far more to it than that. There are different designs and qualities of CT scaner equipment. In the US, some people have access to the newest and highest resolution. The older ones are cheap to use and operate, the latest and greatest are very expensive.

I wonder how many countries use the latest and greatest in their government paid health care plans?

P.S.

I was an electronics technician at OHSU (Oregon Health Sciences University) for a short time.

[spursncowboys]

There's far more to it than that. There are different designs and qualities of CT scaner equipment. In the US, some people have access to the newest and highest resolution. The older ones are cheap to use and operate, the latest and greatest are very expensive.

I wonder how many countries use the latest and greatest in their government paid health care plans?

P.S.

I was an electronics technician at OHSU (Oregon Health Sciences University) for a short time.

Yes how much of their money goes to buying the newer product which keeps those companies to make more innovative products. How many of these countries are the beneficiary of american capitalism?

[ElNono]

My profit is whatever is left after I meet all expenses (my salary is an expense, btw) - and I do not get to set it wherever I want. My brother and I get paid LAST, not first.

Do you get to set your salary?
Is that part of the 'fat' in administrative costs we're talking about here?

Should the services that you company provides be rendered obsolete, would you fight whatever that is that renders it obsolete in order to stay in business, or would you say, 'ok, I saved companies a lot of money through the years, and I'm not necessary anymore. It's all good'?

AVERAGE surgeon SALARY is over $500,000 - private hospitals are doing pretty well, insurance company execs aren't in the poor house; I'm doing alright, etc. etc..... There is SO much money in the system that there are a lot of people making a good living within it; there are also a lot of basic jobs (clerical/sales/administrative) provided throughout the industry, as well.

Well, you know where I stand on this. I have no problem rewarding doctors, even with above average returns in order to encourage training more doctors, but I simply can't apply the same rationale to middlemen.

True, all insurance plans basically pay within a few points of each other; few have a great compe ive advantage; my point was, however, that the insurance carriers do not arbitrarily set payment amounts, they pay based on contractual obligations

Yeah, but they negotiate those contracts with the highest leverage. Now, I will tell you this was by design when it was ins uted, so doctors would stop charging whatever they could get away with in order to reduce costs. But obviously this isn't working either, and in a way we've made it worse. We now have a big middleman with it's profit motives and added administrative fat to sustain along with whatever the doctors can get away with.

Haven't seen anything like the 40% number. You got a link?

This one is an excerpt from a 2003 study (35% back then). I know I saw a more recent one, but I can't recall where I saw it. LINK

[ElNono]

Yes how much of their money goes to buying the newer product which keeps those companies to make more innovative products. How many of these countries are the beneficiary of american capitalism?

Nobody is forcing American companies to sell equipment to other countries.
Not only that, nobody is forcing american companies to sell such equipment at reduced prices.

[ElNono]

There's far more to it than that. There are different designs and qualities of CT scaner equipment. In the US, some people have access to the newest and highest resolution. The older ones are cheap to use and operate, the latest and greatest are very expensive.

I wonder how many countries use the latest and greatest in their government paid health care plans?

P.S.

I was an electronics technician at OHSU (Oregon Health Sciences University) for a short time.

Whatever they use they obtain relatively similar or better outcomes than the US. Which really renders your point fairly moot.

[Wild Cobra]

Whatever they use they obtain relatively similar or better outcomes than the US. Which really renders your point fairly moot.

I don't believe that. Maybe they do on an expectation scale, but I have overheard the differences in what can be done with the higher resolution scanners. Granted, it was years ago, but being involved in technology, little changes. The newest is very expensive, and older models end up being cheaper to operate. Especially once thay have paid for themselves.

[RandomGuy]

CBO numbers are wrong too often. That is not anything to trust.

The CBO analysis dovetails with what the whitepapers about health care cost drivers from Price WaterHouse Cooper have been saying for the last few years I have been reading them.


There is the issue that IS hard to get a solid figure on regarding the use of defensive medicine. That would tend to increase the amounts of tests, such as CT scans that are done. Such demand for tests would tend to drive prices upwards and explain a good part of the higher prices that we pay for procedures.

[RandomGuy]

Question:

You make a certain manufactured good, and are paid by the number of items you make.

If you want make more money, what is the most obvious way to do it?

[RandomGuy]

No guessing necessary:

Claims processing: About $18.00 per month per employee
Network Contract: About $4.00 per month per employee
Large Case Management: About $1 per month per employee
Rx network and administration: About $5.00 per month per employee

That's for my company - and we are usually about 20% below what an insurance company gets for administrative fees. Executive (ownership) compensation amounts to about 5% of our revenue; but I'd like to think we earn at least some of our money.

That actually doesn't get to a percentage.

What is the total administrative costs as compared to the total volume of claims?

The best simple calculation for this would be to take your total expenses for the year and divide that by the total amount of claims paid out on behalf of the insurers you administer claims for.

[ElNono]

The CBO analysis dovetails with what the whitepapers about health care cost drivers from Price WaterHouse Cooper have been saying for the last few years I have been reading them.


There is the issue that IS hard to get a solid figure on regarding the use of defensive medicine. That would tend to increase the amounts of tests, such as CT scans that are done. Such demand for tests would tend to drive prices upwards and explain a good part of the higher prices that we pay for procedures.

What would you say is the standard deviation for those numbers when compared against factual numbers (like say, previous years)? Under 1%, 5%, 10%?