Yes, if prices are skyrocketing it must be a "Crime" caused by all the dirty capitalists enriching themselves. There could be no possible explanation for it. Unless, of course, you want to consider:
1) The stifling HIPAA regime that makes it almost impossible for small, potentially competitive practices to stay open without insane amounts of overhead, explaining their sellouts to larger at-scale healthcare corporations
2) The necessity to offset insanely low negotiated and subsidized Medicare/Medicaid rates with bills on the uninsured, thus bifurcating healthcare recipients into "pays too little" and "pays too much" categories with no in-between
3) The employer-provided insurance scheme--another government-subsidized program--which hides prices from consumers and incentivizes providers to hike up prices
4) Let's not forget about the inability for insurance companies to hedge risk and lower costs by selling insurance across state lines
5) Obamacare destroying any potentially new avenues for innovation by forcing the uninsured to buy into a broken system
What would happen if a doctor or hospital today started practicing medicine at affordable prices, competitively? What's stopping that from happening? If you look for what isn't there instead of what is there, you'd see how we've completely eviscerated any hope of competition, innovation or lower prices in our system.
The "moral outrage" we should have as Americans is not toward the doctors who--as even this article grudgingly acknowledges--are good people working in a bad system. The outrage we should have is toward the captured healthcare-industrial complex that has a stranglehold on our Congress and President, using its influence to send more profits its own way at the expense of patients.
| The necessity to offset insanely low negotiated
| and subsidized Medicare/Medicaid rates
My understanding is that insurance companies often get rates lower than Medicare. It goes something like this:
1) Government mandates the rates for procedure X to make sure that the government is getting the 'best' deal.
2) Hospitals charge insurance companies using these rates (they aren't allowed to be lower, or it wouldn't be the 'best' deal).
3) Insurance companies trim the difference between the Medicare rate and the real rate from the bill with newspeak like, "charge beyond negotiated rates," or, "over-charge of contractual limits."
It basically amounts to the hospital charging the 'correct' rate, the insurance company refusing to pay that rate, and the hospital not pushing it any further since this is all laid out in their formal agreements.
So, I'm not sure if Medicare can be said to have 'insanely low' rates, if the insurance companies end up with even lower rates. (I'd love for someone to correct me if my understanding is wrong, though)
As it was explained to me by the CFO of a major hospital, you are incorrect.
Hospitals would be out of of business if their average revenue per procedure was equal to the Medicare rates per procedure. But that's not to say that hospitals are "losing money" on every Medicare patient, it's much more complicated.
Running a hospital is like running an airline, there are extraordinary fixed costs just to open the doors, regardless if any patients (aka customers) show up. When you have high fixed and low variable cost, if you are operating below capacity then the marginal cost to serve 'just one more patient' is low, and so providing the service at Medicare rates results in net income, all else equal.
Of course the money for the fixed costs eventually has to come from somewhere. Right now, that comes largely from private donations, and rate shifting (higher rates for the privately insured and uninsured).
Simply put it comes down to buying power. No one buys more than Medicare, so it's not surprising that they get the best rates.
Not at all, because when you have monopsony pricing you end up below market price, which drives marginal producers out of business and ends up reducing supply. It's the same reason the argument for the government buying up all the food and distributing it doesn't work: because no one would go into a business where they are guaranteed to make a loss.
In Aus we have a mixed public private system- everyone is treated free but if you want an elective procedure or to see a doctor of your own choice you can pay to do so. I have private health insurance and it costs me $1,500 a year (get dental and optical rebates etc, if I was to require serious treatment it would cover anything under the sun to be done my way)
We have public hospital elective surgery waiting lists but the upside is people with no money can actually get the medical treatment they deserve in order to live functional lives.
I have been involved (as a medical student) in the us system- I know a little about it- and the creation of 'the medical poor' - there are probably better terms for it but basically those unable to get the treatment they need and thus unable to live their lives as functionally as possible - strikes me as sad and unjust.
BTW any comment along the lines of 'but doctors don't get paid for their services so less people will be willing to do it' - next year I will be practicing, in 4 years I can expect to be earning $150,000 and in 10-15 I will expect to be earning $350,000 inflation adjusted. More than enough for a comfortable life in my chosen specialty
In response to #1, I know my uncle had to close his private practice (he is a practicing doctor of 18 years now and had his practice for 8) because of absurd costs and time investment in doing bookkeeping and playing hardball with everyone. He closed and is now working as a surgeon at a major hospital, but says he likes it a lot more since hes actually a doctor now and not a barterer or economist.
1) The stifling HIPAA regime that makes it almost impossible for small, potentially competitive practices to stay open without insane amounts of overhead, explaining their sellouts to larger at-scale healthcare corporations 2) The necessity to offset insanely low negotiated and subsidized Medicare/Medicaid rates with bills on the uninsured, thus bifurcating healthcare recipients into "pays too little" and "pays too much" categories with no in-between 3) The employer-provided insurance scheme--another government-subsidized program--which hides prices from consumers and incentivizes providers to hike up prices 4) Let's not forget about the inability for insurance companies to hedge risk and lower costs by selling insurance across state lines 5) Obamacare destroying any potentially new avenues for innovation by forcing the uninsured to buy into a broken system
What would happen if a doctor or hospital today started practicing medicine at affordable prices, competitively? What's stopping that from happening? If you look for what isn't there instead of what is there, you'd see how we've completely eviscerated any hope of competition, innovation or lower prices in our system.
The "moral outrage" we should have as Americans is not toward the doctors who--as even this article grudgingly acknowledges--are good people working in a bad system. The outrage we should have is toward the captured healthcare-industrial complex that has a stranglehold on our Congress and President, using its influence to send more profits its own way at the expense of patients.
High prices are not a crime. Bad policy is.