Health care costs are out of control

Jed Stuber  ·  May 29, 2018

Americans have gotten used to horror stories about steep annual increases in health insurance rates, and early indications are that 2019 will be a doozy.

Insurers in Virginia and Maryland are seeking rate increases of 64 and 91 percent. Bloomberg reports, “The first glimpse of what health insurance companies plan to charge for Obamacare plans next year suggests there’s no relief ahead for consumers saddled with high premiums.”

Many Americans are already dealing with premiums that have tripled since the Affordable Care Act began. Maryland’s health insurance commissioner told the Washington Post, “I believe we’ve been in a death spiral for a year or two.”

Steven Weissman, an attorney and former interim president of a Miami hospital, says the insurance companies’ secrecy and deception is the main problem:

  • Insurance contracts prohibit the disclosure of contracted prices.
  • Insured patients are given the false impression that their insurance company got them big savings off “list” price, which is artificially inflated up to 12 times real billed prices.
  • If you are out of network or uninsured you may actually be charged 12 times more than your neighbor for the same service.

Here are a few more staggering health care-related news items to consider:

  • Charges for services not rendered, data entry errors, and unreasonable charges for simple items (see illustration above) are common.
  • Insurance deductibles are so high that patients are paying for surgeries with cash because it costs them less. Instead of welcoming cash payment, hospitals are developing sophisticated technology and legal strategies to compel patients to disclose they have insurance.
  • An Oklahoma man realized that a surgery on his daughter’s ear would cost $7,600 and he would have to pay his $6,400 deductible out of pocket. Instead he went to the Surgery Center of Oklahoma and paid $1,700 cash for the same surgery.
  • According to a study in the American Journal of Public Health, government paid for 64.3 percent of health care before the Affordable Care Act. Medicaid, Medicare, the Veterans Administration, and insurance for public employees were included, but subsidies for those required to purchase ACA plans and “risk corridor” payments to insurance companies—still being paid despite controversy—have pushed the percentage higher.
  • The VA has 30,000 vacant clinical positions. Eligibility-claims processors are in such short supply, there remains a waiting list 75,000 veterans long. Appeals of eligibility denials have a backlog of more than 300,000 and take an average of 2.5 years to resolve.
  • A conservative estimate of fraud in Medicare/Medicaid alone is $100 billion per year. The government only does random sample audits, not fraud audits.
  • There’s been a 2,300 percent increase in health care spending per capita since 1970. The vast majority of it is administration, not medical services.
  • According to an analysis in Forbes, the average person in 2016 had to work 63 days a year just to cover his/her own health costs. That’s nine times longer than it was in 1940.
  • According to the U.S. Treasury, taxes to fund Social Security and Medicare are projected to fall $46.7 trillion short over the next 75 years. Economist and Boston University professor Larry Kotlikoff says the health care liabilities aren’t being accounted for properly and the true deficit is $211 trillion.
  • According to economist Thomas Sowell, modern economics and thousands of years of history show that government regulation of health care can only result in rising costs, poor quality, shortages, and black markets.
  • National Center for Policy Analysis health care expert Devon Herrick reports that health care accounts for a fifth of our national income, and the regulation of it has been captured by the largest players in the medical industry. Regulation and licensure are used by powerful financial interests to form cartels, prevent competition, and keep prices rising.
  • Politicians continue to propose more regulation, not less. The health care industry spends more on lobbying than defense, aerospace, oil and gas combined.

Samaritan members face this very challenging health care environment as they seek to steward resources well, but be encouraged. See the story by member Paul D. Price and view a video message from Samaritan leadership.

Illustration source: Advanced Medical Pricing Systems