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    "When many cures are offered for a disease, it means the disease is not curable" -Anton Chekhov

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    Tuesday, October 08, 2002

    Cost of Health Care From the Frontlines: A reader sent me the following email on trial lawyers, health insurance, and the cost of medicine:

    ...the bureaucratic inertia and slow paying you described so well in a recent medpundit piece indict the health insurance industry. I have seen the forms processing from the inside as a computer consultant, and I can assure you that the 15-30% administrative overhead the insurance companies add to health care is primarily a paper shuffling waste of time.

    Efforts to make the trial lawyers the primary cause of health cost inflation have one essential fault. The argument just isn't true. I think the case about health care is made most eloquently with a simple pie chart. Everyone who I have ever talked to about these issues is stunned to find that physicians only make 20 cents out of every health care dollar. When they realize that insurance companies take an equivalent amount that represents pure overhead, they begin to see the shape of the problem more clearly.

    I agree. The malpractice insurance crisis isn’t driving up the cost of healthcare. It’s doing something much worse - limiting the access to health care. Doctors can’t raise their fees to make up for their increased malpractice insurance rates. Our system won’t let them. Fees are determined by Medicare and the by the insurance companies. So, when the overhead becomes too expensive, as it has with the malpractice insurance premiums, doctors have no choice but to go out of business. When it comes to the high cost of healthcare, it’s the insurance companies and our indiscriminate use of drugs that have cost us so much.

    In the long run, most people would be better off if they paid their every-day outpatient medical expenses themselves, as my correspondent has discovered:

    We ran the figures for my wife, a Type II diabetic. Between her quarterly doctor visits, quarterly lab tests, six medications, and disposable supplies, her care costs about 300 bucks a month. Her school district is paying $800 a month for both of us and we are now paying co-pays of about 150 per month. She would qualify as a reasonably high risk patient, but the insurance company is still making 450 a month on our little family. Something is wrong with this picture, and until we have a widespread national debate, nothing is going to change.

    Yup. Like all middlemen, the insurance companies don’t offer much except increased administrative and cost burdens.

    The same reader also sent along this link about a bill introduced yesterday by Senators Wyden and Hatch that proposes a national dialogue on health care costs and how best to approach them. I’m not sure if Congress is the right venue to answer this question.Their other foray into healthcare, Medicare, isn’t much better than private health insurance. In fact, it’s a lot worse.

    posted by Sydney on 10/08/2002 06:11:00 AM 0 comments


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