Health care costs in the United States are an ongoing concern. And well they should be. They are the highest in the world, per person, and far outstrip the costs for the same or similar levels of care (or even higher) in our peer nations.

I’ve looked at thse comparative costs previously.

Yet we have millions of Americans who still lack health insurance. While there are some ameliorating factors, these uninsured (and a good number of them are working or in working families) face the highest costs of all for health care, especially when an illness or injury necessitates their hospitalization. Faced with having to pay the costs of their treatment themseves, they frequently accumulate overwhelming debt.

Medical care debt accounts for about 42% of the 1.5 million bankruptcies filed each year. Remarkably, over 75% of those filers had health insurance. But high deductibles and/or copays, uncovered treatments, or coverage limits lead to this debt.

The Patient Protection and Affordable Care Act (PPACA or just ACA) by its name infers that it is a direct attack on these high medical care costs. I look instead to the intent of the law to provide health care insurance coverage to an additional 30-50 million Americans as its primary purpose.

The law does contain provisions directly related to the actual costs of treatment, but there is no way of actually knowing the total effect of these provisions until the ACA is fully in force in 2014.

Related to the high cost of health care is the high cost of insurance, whether under a group policy for employees or members of affinity groups or individually.

The law, if basic principles of supply and demand and spreading risk over larger numbers apply, should mean lower premiums. In other words, the private insurance companies   will provide the bulk of coverage to this additional customer base. With so many more customers, the total premiums needed to support coverage payments will bring lower premiums per customer.

There is no guarantee, however, that this will occur. Critics of the ACA are fond of pointing out that private insurance premiums have risen significantly since passage of the law. Of course they blame the ACA for this increase while chortling that President Obama promised a reduction of premiums of $2500 per family due to the law.

The Washington Post Fact Checker has looked at these mainly political claims and found them wanting.

In fact the “promise” of Obama that premiums would decrease by $2500 was a projection that premium costs in 2016 would be that much lower than they would have been absent the law, not that there would be a reduction by such amount from current premiums.

The rising costs of Medicare are also thought to be a problem. With people living longer and more seniors reaching eligibilty age, there are some predictions that Medicare costs will be a huge budget buster.

I don’t have data available that would illuminate the exact relationship, but surely Medicare faces budgetary problems due in part to the overall rise in health care costs, not simply its demographic realities.

In February a Time Magazine cover story by Stephen Brill focused on our health care costs and examined them in depth. He presented examples of what patients without insurance pay, what the government pays for Medicare patients, and the charges to private insurers, all for the same procedures, treatments, drugs, medical devices, and hospital stays.

We learned from that article that hospitals maintain what is called a “Charge Master”, essentially the rates billed to whomever pays for a patient’s treatment. If the patient himself pays the bills are extraordinarily high. Private insurers pay far above the costs to hospitals and Medicare patients are billed the least of all.

It came to our attention…if it had not entered our consciousness previously…that “non-profit” hospitals appear to be anything but.

Brill used the information that he discovered to suggest that the extension of Medicare to more, younger people was one way to help address these high costs. Or any single payer system might accomplish the same goal whether through Medicare or not.

Now the governemnt has released data on medical costs in a comprehensive format that provides additional proof that our health care costs, if nothing else, are erratic and wildly disparate from provider to provider with seemingly no rational basis for the differences.

 Huffington Post gives us some examples from wading through the new report and showing how much disparity there is in charges by hospitals within the same geographical area.

The government data base itself is accessible here:

Here is an example of disparity in cost highlighted in the HuffPo article.

When a patient arrives at Bayonne Hospital Center in New Jersey requiring treatment for the respiratory ailment known as COPD, or chronic obstructive pulmonary disease, she faces an official price tag of $99,690.

Less than 30 miles away in the Bronx, N.Y., the Lincoln Medical and Mental Health Center charges only $7,044 for the same treatment…

There are startling differences in the charges for the same services at the two hospitals in my home town of Morgantown, W.Va., barely a mile apart if that.

For instance the charge for a heart catheterization w/ drug-eluting stent is $48,454 at WVU Hospitals, a teaching hospital connected with the university, while just up over the hill at Monongalia General Hospital (established by the county) the charge is $30,334. That is where I underwent the procedure four years ago.

Meanwhile, at UPMC Presbyterian in Pittsburgh, 75 miles away, the charge is $85,023. Of course that is an even larger teaching hospital than WVU.

Now the charge is not what is paid. The average covered payment at each of the three institutions is $16,974, $10,039,, and $14 870 respectively.

But the difference between what is charged and what is paid merely emphasizes the seemingly voodoo approach to determining the charge in the first place.

If you combine the reportage of Stephen Brill with the bombshell facts emerging from the Government report one is left scratching one’s head in bewilderment. (And if this head-scratching continues, who the hell knows what the charge will be for treating any resultant condition?)

Exploring in detail the factors entailed in setting these prices requires work that exceeds my capabilities here.. But even a cursory examination gives impetus to the notion that the normal so-called free market characteristics of supply and demand, the cost of procuring supplies, transportation, labor costs, etc. are only a small part of the processes entering into the Charge Master.

Now that we have infinitely more information available on medical costs we can enter more intently into the world of policy making and implementation that can more reasonably apply charges that fairly compensate providers while reducing the burdens on those who pay for these services. Ultimately doing so will allow us to make access to health care both more available and more affordable to all Americans.

That does not mean we should expect perfection. It does mean we should expect to be Charge Masters of our Domain.

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  • umoc193  On May 13, 2013 at 5:01 PM

    Here’s even more evidence that medical costs will continue to be a problem and whatever the intent of the ACA, there is still a piecemeal approach to addressing these costs that will bring inconsistencies and probably perceived, if not actual, injustices.

    But yet many of these problems may still work themselves out once the law is fully in frorce and over time. Hard to predict right now.

  • Little_Minx  On May 14, 2013 at 2:49 AM

    À propos of scientific research (some of which is basic research into medicine)…

    “Canada Sells Out Science”:

    Over the past few years, the Canadian government has been lurching into antiscience territory. For example, they’ve been muzzling scientists, essentially censoring them from talking about their research. Scientists have fought back against this, though from what I hear with limited success.

    But a new development makes the situation appear to be far worse. In a stunning announcement, the National Research Council—the Canadian scientific research and development agency—has now said that they will only perform research that has “social or economic gain.”

    This is not a joke. I wish it were.

    John MacDougal, President of the NRC, literally said, “Scientific discovery is not valuable unless it has commercial value”. Gary Goodyear, the Canadian Minister of State for Science and Technology, also stated “There is [sic] only two reasons why we do science and technology. First is to create knowledge … second is to use that knowledge for social and economic benefit. Unfortunately, all too often the knowledge gained is opportunity lost.”

    I had to read the article two or three times to make sure I wasn’t missing something, because I was thinking that no one could possibly utter such colossally ignorant statements. But no, I was reading it correctly. These two men—leaders in the Canadian scientific research community—were saying, out loud and clearly, that the only science worth doing is what lines the pocket of business.

    This is monumentally backwards thinking. That is not the reason we do science. Economic benefits are results of doing research, but should not be the reason we do it. Basic scientific research is a vast endeavor, and some of it will pay off economically, and some won’t. In almost every case, you cannot know in advance which will do which.

    In the 19th century, for example, James Clerk Maxwell was just interested in understanding electricity and magnetism. He didn’t do it for monetary benefit, to support a business, or to maximize a profit. Yet his research led to the foundation of our entire economy today. Computers, the Internet, communication, satellites, everything you plug in or that uses a battery, stem from the work he did simply because of his own curiosity. I strongly suspect that if he were to apply to the NRC for funding under this new regime, he’d be turned down flat. The kind of work Maxwell did then is very difficult to do without support these days, and we need governments to provide that help.

    In his statement above, Goodyear did throw in a mention of “social benefit,” and I’ll agree that does motivate many scientists—making life better for people is a strong incentive—but again, you cannot always know what research will do that and what won’t.

    And that’s OK, because it’s not like the money is wasted when invested in science. For one thing, the amount of money we’re talking about here is tiny, tiny, compared to a national budget. For another, investment in science always pays off. Always, and at a very high rate. If you want to boost your economy in the middle and long run, one of the best ways to do it is invest in science. Instead of slicing away the scope of what scientists can do to save pennies and focus on narrower goals, the government should be increasing their budget and widening their vision.

    But the Canadian government is doing the precise opposite. If proposed and immediate economic benefits are the prime factors in choosing what science to fund, then the freedom of this human endeavor will be critically curtailed. It’s draining the passion and heart out of one of the best things we humans do.

    By doing this, the Canadian government and the NRC have literally sold out science.

    • Little_Minx  On May 14, 2013 at 2:45 PM

      And THIS:

      “Sequestering Scientific Discovery”:

      Right now, 5 fewer volcanoes have any active volcano monitoring along the vast Aleutian arc. That might seem insignificant to many people — I mean, what harm do five volcanoes in the northern Pacific pose? — but really, it is symptomatic of a greater issue with volcano (and science) research across the globe today. We might not be facing a volcanic crisis today in the United States, but with fewer volcanoes being watched in real time and few funds to expand some of the active but sparsely monitored volcanoes that are right in our backyard.

      The budget reductions in the United States have hit important volcano monitoring institutions like the Alaska Volcano Observatory hard. The budget for AVO has fallen to half of its peak funding, down to ~$4 million per year to monitoring the 52 active volcanoes of the state of Alaska (this doesn’t even include the cooperative work AVO does with KVERT to monitoring the volcanoes of Kamchatka.) Do the math, and that is a paltry $76,923 per volcano. The cost to replace or install a single seismometer would eat a significant portion of that money … and that isn’t even counting the salaries for the people who are needed to then maintain and interpret the seismic information coming from the instruments. These volcanoes not only threaten the people of Alaska, but also those all-important trans-Pacific air routes to Asia from North America. Ash is a major danger for jet aircraft, so flying unbeknownst into a volcanic cloud can be extremely treacherous and potentially deadly. Extend this to some of the volcanoes in the lower 48 states, where many times little-to-no monitoring equipment installed directly on the volcano (except for the famous ones like Yellowstone, St. Helens and Rainier), and we’re left with a volcano monitoring network that has holes that could prove to be costly, both in terms of lives and money.

      However, the biggest issue here, in my mind, is the fact that so many people just don’t see vital, pure research in volcanoes as important. Sure, I have a vested interest in this as an active volcano scientist, but what do we make of announcements like Canada’s National Research Council (NRC), where future research must have a commercial application? Understanding how magma’s evolve and accumulate under a volcano does not have an immediate commercial application, yet is something we need to know if we are ever going to have a chance to develop predictive models for volcanic eruptions. Even more than this, it smacks at the core of what it means to do science — curiosity. No longer is it okay for gaining knowledge through pure research, but instead it must be something that can make money. This limitation is stunningly shortsighted. Not only does it imply that research needs to put in the monetary context of the current market, but also it suggests that exploration is not worth the effort or cost. Without pushing boundaries, science and knowledge cannot move forward and trust me, making science beholden to commercial interest will not accomplish this.

      Sure, you can say “it’s my tax money, why should I fund [fill in research].” Let me ask you this: can you assess, merely on the soundbites or even brief synopses on research agency websites, what the applicability and soundness of the research might be? I know I can’t, but that is why we have a peer review system that can assess research and its potential outcomes. In the United States, the National Science Foundation budget is a drop in the federal bucket (~0.02% of the total 2012 budget – ~$7 billion), yet for some reason makes an easy target for those budget hawks who are looking for fat to cut. Science is now considered fat that is unnecessary for government spending. I’m not going to play the game of what the NSF budget translates to in terms of the cost of other programs or pieces of military equipment, but all of the important, pure science research funded by the NSF amounts to ~$22 per year for each US citizen. How many of you spend more on donuts per month than what it takes to fund science?

      Our options are limited in how to fund pure science or volcano monitoring. Do we become beholden to commercial interest by requiring private funding for science — and if you can’t get funding from a company than your research is “unworthy”? Do we turn scientists into internet buskers, asking for money to do their work through Kickstarter campaigns? Even my research, which is limited by the nature of my job at a small liberals arts college*, costs a significant amount of money per year to pay for student stipends, lab time, supplies, travel, field work and more. For my colleagues at research-oriented institution, where research productivity is vital for job security, the cost is much higher. By cutting government funding of research or forcing the commercialization of science research, we’re saying that science for discovery is no longer viable or useful. Is this something you want to teach your children or grandchildren, that science can only be done if it will make someone money? Or do we want to say “no” to this trend that “business is boss” across our society and make the stand that science research is the core to discovery in the United States and across the globe.

      * I love being at a liberal arts college, don’t get me wrong. The scope of research I do is limited by the time I need to dedicate to teaching and the fact that my university is only undergraduate students.

Please give me your thoughts.

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