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Topics of interest to both consumers and agents related to Covered California and the ACA biased in favor of the successful implementation of the Exchange and deliberately apolitical.


Why Medical Bills are Killing Us

By on | 3 Comments

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The Affordable Care Act (ACA) does little to answer questions like: “Why are we paying so much? Why do we spend nearly 20% of our gross domestic product on health care? Why do we spend more than the next 10 countries combined and not get better results than them.

The February 20th, 2013 issue of Time magazine was entirely devoted to one story - Bitter Pill: Why Medical Bills are Killing Us by Steve Brill. The 24,000 word article “follows the money” to reveal how hospitals, the drug companies and some doctors game the system for huge profits. Download article -> Biter Pill

One answer is that health care is a seller’s market and we’re all buyers - buyers with little knowledge and no ability to negotiate. It’s not a free market. Hospitals and providers charge prices that bear little relationship to costs. They charge what they want to and we have to pay.

We like our villains, our scape goats, someone or something to blame it all on. Usually we pick on the insurance companies, easy targets, but they are buyers like we are, albeit with some negotiating position. If Brill’s piece has a villain, it’s something I never heard of - the Chargemaster, a mysterious internal price list for all products and services that every hospital in the US keeps. Charge master is responsible for indecipherable hospital bills with highly inflated prices, like an Alcohol Prep Pad for $7 each. This is the little square of cotton used to apply alcohol before an injection. A box of 200 can be purchased online for $1.91.

If there is a hero, it’s Medicare. It turns out that Medicare does more than Obamcare to bend the medical cost curve. That’s because the government program, by law, can only pay hospitals and providers the approximate cost of care. Hospitals say they lose money on Medicare, but they don’t.

The ACA does contribute to lower healthcare costs over the longer term by providing more transparency and competition on the payor side. On the provider side, the ACA supports Affordable Care Organizations (ACOs), new models that integrate hospital and physician services to achieve greater accountability and coordination of health care. California’s health care policy wonks are working to track the development of integrated approaches to the delivery of care and financing to determine how ACOs would work in the public sector (community clinics and public hospitals) as well as the private health care marketplace.

3 Comments

I have heard when Medicare Part D was passed that part of the bill included taking away Medicare's ability to negotiate for lower drug prices, as a group, like the VA does. This seems crazy to me. Did this happen and if so was this a "gift" to the pharmaceutical industry and will this be reversed? Also, what role do drug patent time lengths play in drug costs? Shouldn't they be lowered and generics allowed in to the marketplace sooner?

What I want to know is why do we have health insurance companies as the "middle man" between us and our health care? Why are these bureaucrats allowed to decide what medical procedure is best for us? Isn't the doctor the one who should decide? After all, the doctors are the ones with their feet on the ground.

Has anyone else noticed the run-up in health insurance prices during the past two years before Covered California gets going? My health insurance premiums went up more than 20%. I just couldn't afford it anymore. I think the health insurance companies are trying to position themselves financially before Covered California gets started.

The Time article, Bitter Pill, was a great piece. It does a fair job of describing the shortcomings of the U.S. healthcare system. I can't defend the system and know that current government program changes will be difficult.

It will likely take years to implement the changes in accessibility, coverage and costs described resulting from the ACA. My goal as an independent agent is to stay abreast of the changes and continue to be a resource for friends and neighbors that need good information to make the best health care decisions for their families. Knowledge is always the best prescription. Much thanks to the folks at CAHBA for keeping me up to date.

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