February 27, 2013
Editor:
Dave Uphoff
Health care costs continue to increase at an alarming rate. Anyone who has health insurance has noticed the increases in insurance premiums. There are several reasons for the increase in health care which include increasing use of expensive equipment, the lack of tort reform to prevent excessive malpractice law suits, the increase in longevity which results in a greater need for health care, treatment of the uninsured at emergency centers and new drugs. However, increased profits by our medical institutions is also a factor.
This fact was made more apparent last week when a news article entitled "Bitter Pill" by Stephen Brill appeared in Time Magazine. The author's research indicated profits were abnormally high at many major hospitals and medical institutions. Pills that cost 10 cents are charged at $10 apiece. Charges for use of medical equipment had a high markup. Nurse services were being charged at $1200 per hour at some hospitals. Administrators at some teaching hospitals made $4 million a year while the head of the university associated with the hospital made $500,000! Those who require medical services have no clout in dealing with hospitals regarding cost. A sick person cannot just go down the street to find a better price. There is a relative scarcity of hospitals in the market place. If you have cancer you don't have the time or resources to shop around. When there are a lot of buyers(sick people) and few sellers(hospitals), guess who has the upper hand? Even though Americans pay more for health care than any other country, our quality of care is ranked 36th in the world! Why is this allowed to happen? One reason is Congress. Americans pay 50% more for drugs that other developed countries which result in exorbitant profits that far exceed the research cost of the drug . Why? Because other countries put a limit on how much drug companies can charge. Even Medicare is hampered by Congress. Congress refuses to allow Medicare to keep from paying for a higher cost drug if it is proven that a lower cost drug is just as effective.
The biggest surprise in the article is that Medicare is the one institution that helps keep the lid on medical cost. The reason is because Medicare is the biggest player when it comes to providing insurance for medical coverage and, therefore, has clout in determining how much will be paid for medical services. Conservatives can complain about big government but if it weren't for Medicare, either our health costs would be out of sight or we all would be dying sooner because of lack of medical care or both.
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The biggest issue facing our economy is the inexorable rise in health care costs. Why doesn't Congress do something about this? According to Mr. Brill, it's because the medical and pharmaceutical profession have a powerful lobby in Congress ranking second in lobbying funding behind financial institutions. Health care costs will consume this country if something isn't done. Americans have been taught to believe the market place will take care of everything while government intervention will make the market inefficient. But is this really true? Everyone tweaks the market whether it is two companies combining to form a monopoly on prices or rich investors receiving confidential information that allows them to make a killing in the market or lobbyists who influence the action taken by Congress. Utility companies are regulated because everyone needs heat and electricity. In the same manner everyone requires health care of some sort. To regulate health care costs is similar to regulating a utility. Unbridled capitalism results in huge inequalities in wealth. Regulated capitalism can help prevent our economy from being destroyed by rogue financial and medical institutions and enable the average American to make a decent living. While the goal of Obamacare is to get everyone affordable medical insurance coverage, it is more important to address how to reduce the cost of medical care, else no one, rich or poor, will be able to afford medical care. Until Congress takes action to address the factors that result in higher health care costs, our country faces a rough road ahead.
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