Leaving aside the actual merits of the argument about the woman with bladder cancer who’s in danger of losing her oncologist due to the consequences of the PPACA, there’s something about the discussion I’m curious about. Why is the woman’s insurance company being accused of profiteering while her oncologist and other healthcare providers aren’t?
Is the reason due to some preference for labor over capital? I think that’s a particularly weak argument. Without the insurance company the woman would have been forced to bear the entire cost of her treatment herself which means, presumably, she would have gone without and, possibly, died. The insurance company is performing a service and the service deserves to be compensated. Judging by the estimates of the cost of her treatment, it’s a pretty darned valuable service.
The median hourly wage of an oncologist is about $100 per hour. Frankly, I’m skeptical that any hourly wage over about $30 per hour earned by anybody for anything is actually the cost of labor. I think it’s some combination of the actual cost of labor, a premium for capital investment, and the result of restrictions on the distribution of medication, barriers to entry, and other anti-competitive measures.
So, why are the insurance companies the bad guys?
It is relatively easy to compare prices for insurance policies, with the result that a person who subscribes has some confidence that he has gotten a “good deal.”
That’s not the case with the pricing offered by healthcare providers, who do everything they can to hide the ball: bogus fee schedules, discounts for insurance, Medicare and Medicaid, and so on. The truth is that all insurance is a very bad deal and medical treatment in Amerika is as well.
A simple cataract operation, the most common in the world, costs from three to nine times as much as it does in Mexico, Hungary, Prague, India, Thailand, Costa Rica and Brazil. We won’t get fair pricing in this country until Amazon or Walmart start providing health care.
I had a related question when people were complaining about the amount of resources insurance companies spend that is not going to healthcare, and rules to cap it. Why not cap the amount healthcare providers spend that is not going to healthcare?
Dave, you’re right on the money as usual.
PD Shaw, one of the oft-repeated phrases about Medicare is that its overhead costs are lower than private insurance. Part of that is due to the fact that they offer fewer plans, but part of it is that they spend less on detecting fraud, arguing for more information before processing a claim, and, you could argue, don’t play hardball enough with providers to drive down costs to the full extent they could.
If an insurance company merely received bills from insurers and sent out checks, overhead on non-medical expenses would be low, and the cost of insurance would be astronomically higher.
Insurance companies don’t have profit margins that are that high. One of the issues is that they aren’t “insurance companies,” they’re cost-pooling companies. They take all the expenses groups spend on healthcare (everything from prescriptions to childbirth to oncologists) and spread it around, and charge a bit of a premium for doing so. Unfortunately, from the point of view of consumers, an insurer ‘denies’ them healthcare, while a doctor ‘provides’ it. Blame for high costs goes to insurers, not providers. It’s about optics, not reality.
It’s profiteering when someone you don’t like makes a buck. Or when someone you need to victimize makes a buck.
Ellipses has me thumbing through the Devil’s Dictionary:
POLITICS, n. A strife of interests masquerading as a contest of principles. The conduct of public affairs for private advantage.
I wonder what the woman with bladder cancer thinks about a healthcare law that requires no copay for the pill whatsoever, but does for life-saving cancer drugs. POLITICS?
“I wonder what the woman with bladder cancer thinks about a healthcare law that requires no copay for the pill whatsoever, but does for life-saving cancer drugs.”
It’s of a piece, I think, with how the elderly are treated vis-a-vis newborns. We will spend hundreds of thousands of dollars to save a preemie in a NICU. And almost nothing for a elderly person dying in eldercare facility.
We value the young over the old. I’m not saying that allocation of resources is wrong, just that it is.
sam:
Somewhere around here I’ve got some bar charts illustrating national healthcare spending by age cohort for us and several other OECD countries. What’s notable is how skewed our spending is towards those over 65
@sam, technically this is spending to prevent newborns, but I wonder if there are co-pays for vasectomies any more?
“What’s notable is how skewed our spending is towards those over 65”
I worked for two years in an eldercare facility. Hardest job I ever had. Believe me, not a lot was being spent on those folks. Now, that was in the 80s and things may have changed somewhat. But as far as those places go, I sincerely doubt it. You go into one of those, you go to die.
1) The bladder cancer story makes little sense. Her insurance company insured only 8,000 people in the individual market? That plan was folding soon anyway. Given how insurers put people in blocks, and how the sickest tend to remain until the company jacks up prices to get them to leave, her plan was going to disappear soon. Absent the ACA, she likely cannot buy insurance at any price on the open market. (These anecdotes almost all seem to have issues.)
2) The docs were being paid their fees by a private insurer to care for this woman, so the health care market, via the insurer, negotiated the fees.
3) If the insurers are profiteering, it is probably by leaving the market now, when presumably the sickest are signing up early, and re-entering later (as they said they would) when healthier people are signing up. The oncologists could be profiteering if they did change their fees or practices in some way to take advantage of this woman. That is not claimed anywhere in the article.
Steve
TimH- Dealing with Medicare takes very little time. Dealing with private insurers takes up a lot of time. Someone has to pay for all of that time. In Canada, it costs the average doc about $22,000 a year to collect his bills and deal with insurers. In the US it costs about $82,000. My guess is that this actually grossly underestimates the differential. I spend vastly more time dealing with private insurer hassles than with Medicare.
http://www.healthaffairs.org/press/2011_08_04.php
Steve