We have previously written extensively on America’s soaring healthcare and health insurance costs (here, here, here and here), so instead of boring readers with even more words, here are some charts courtesy of Deutsche Bank that make a most persuasive case. Now if only the Fed, which is still convinced inflation is well below 2% and should keep easing, were to notice these.
We start with a very painful for many observation: after a period of modest quiet, healthcare inflation is soaring, with insurance inflation now the highest since before the financial crisis.
That’s just the beginning though: it’s only downhill from here for healthcare inflation. Or, rather, uphill.
It’s not just healthcare of course: as the next chart shows, there is plenty of inflation in the price of healthcare, education, and housing:
After the number of Americans without health insurance tumbled into Obama’s second term, this number has started to rise again, perhaps as a result of the surge in insurance costs.
Those who do have insurance are probably not all that happy: in the past decade, total annual healthcare premiums increased more than 50%!
The average annual premium for US families has risen to $20k in 2019.
Yet while a near record number of Americans have health insurance, ironically out-of-pocket healthcare spending has soared in recent years:
As a result, the total annual healthcare spending per family is now a record $23,000.
What is the reason for this divergence: one words – deductible. As the chart below shows, the annual deductible across all health insurance plans has tripled since 2006.
Even more ironically, the US should have the world’s best healthcare system, if only based on how much money is spent on it as a share of GDP:
As a reminder, Medicare and Medicaid spending make up more than 25% of total federal outlays.
One reason behind America’s woeful healthcare situation: 27% of the population have pre-existing conditions.
So where do Americans spend the most money? Why at hospitals of course, followed by clinics, dental, home healthcare, and prescription drugs.
Of course, if it wasn’t for insurance, prescription drugs would be in first place by a huge margin. Here’s why:
Then again, it’s not like hospital costs will drop any time soon:
One final point: just in case there is any confusion at the Fed, this is how much faster than CPI and wage inflation healthcare premiums have risen in the past two decades:
And one bonus chart: here is a map showing the share of US population spending more than 10% of their income on premium contributions.
Source: Deutsche Bank
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The problem with the medical care delivery system is its cost, and that’s largely controlled by the medical establishment through a cartel mechanism. Insurance only increases that cost as now more people need to make a profit on any medical treatment.
The solution is to outlaw insurance for routine medical expenses. Only allow policies that cover catastrophic situations like cancer, stroke, etc. Then force doctors to publish their rates so a patient can shop for the best deal in their opinion.
As long as there’s a 3rd party payer, costs will NEVER be reduced. The way to reduce costs is to have competition and to kill off the vultures feeding on the current system. Eliminate insurance for all but catastrophic illness and force doctors, hospitals, etc to compete by removing the secrecy on costs that make it impossible for the public to make an informed choice. Once the patient is required to pay for the service out of his own pocket, he’ll shop for the best price and in short order, all costs come down to what the average person can afford as there is no other free market alternative.
Agree.
One additional thought : Government fucks up everything it touches.
A profit motive in healthcare is not the best way to go imo. More than anything else, you want the healthcare industry filled with people who are in it because they care.
troll much ?
Profit motive is the ONLY thing that’ll work. Now that needs to be balanced with the appropriate risks and competition in order to have REAL price discovery.
Unfortunately, that era is over in the USSA.
People do what they do in a professional capacity because they see it as their calling.
Someone in the medical field isn’t likely to have been the counter person at Wendy’s last week, the mechanic at the muffler shop last month or the guy picking up your garbage this morning. There’s a skill set involved and it takes time and dedication to acquire those skills. The front line people in medicine are motivated, generally knowledgeable individuals wanting to do what they do. I believe that’s a given.
The system they function in is corrupt to the bone and the vast majority, I believe, would like to change it but don’t know how. They’re stuck. The current system attracts people who are in it for the money along with the dedicated folks. The system today attracts those we, the patient public, want out of that system.
I remember well when there were adverts on TV in NYC specifically aimed at doctors to show them how to improve their financial situation. Shortly thereafter the home doctor visit was abandoned. That alone should indicate my age. Doctors became more predatory because they were told it was their right given their education and importance to the society.
Prices rose. Time with the doctor fell and was replaced with forms and the time of an assistant. Along came the insurance mafia to ‘help’ with costs. Quickly, the insurance industry owned the medical market because they had control of the money. The doctors invited their own enslavement but realized it too late.
Today, all 3rd party payer noise is avoiding the overall cost problem. Not until routine medical issues are paid out of pocket will the system as a whole adjust to what the free market can afford. When a doctor has no 3rd party to pay the bill, his/her prices MUST come down to what average people can afford as there is no possible other option. Once routine prices get aligned with the ability to pay for service, the over use of doctor visits will diminish, the overuse of useless prescription meds will diminish and the gap between doctor types will also get realigned as industry pressure won’t stomach outrageous bills when doctors themselves become part of that patient base.
Wait a minute. These folks are the “best and brightest” in medicine — not the mechanics or Wendy’s cashiers, as you put it — yet the vast majority (in your words) would like to change it but don’t know how.
Either they aren’t as skilled/intelligent/critically thinking as you believe, or they are uninterested/unwilling to change the system.
Which is it?
I agree in general, but some things are not shoppable. When they’re hauling you, unconscious, in an ambulance to a trauma center, you can’t comparison shop. I assume that that’s something your plan would allow insurance to pay for, but that’s not sufficient to fix the problem. The hospital can still issue a fake, inflated invoice to the patient which artificially increases the perceived “need” for insurance – which allows insurers to Jack up the premiums.
In my case a few years ago, I got an invoice for $116,000 for five days in intensive care (no surgery). After it was processed by the insurance company, the total (real) cost dropped to about $14,000 of which I paid $5,600 as my deductible. So insurance only had to pay about $8,400 in a year when my total family premium was about $19,000 for a high-deductible policy. If I had only faced the actual cost of $14,000, I’d have done better to not even have insurance and pay the whole $14k out of pocket, but without insurance I’d have faced the fake $116,000 invoice. Maybe I could have bargained it down to $40-50,000. Most uninsured people would just file bankruptcy.
What needs to happen is to outlaw fake bills. The provider shouldn’t be allowed to accept $X as payment in full from an insurance company while issuing an invoice to the patient for $8X. The price should be the price, no matter how it’s paid. I got that from Karl Denninger, and he’s right.
BTW, anyone who thinks my insurance cost/coverage is uniquely crappy just needs to look at the chart above where the average family coverage premium is now $21,000. If your employer only passes 1/3 of that on to you, the other 2/3 is affecting your overall pay.
In some states the insurance company cuts a deal with the provider, the insured pays his or her deductable and the provider turns around and bills the insured for the balance not recovered from the insurance company. It is my understanding this incident was taken to court and the court found in favor of the provider. It is also my understanding there is an appeal being made to that decision.
Theft my folks is way, way out of control. The general population had better brace themselves for what is coming, single payer. Oh by the way I live in the socialist republic of Michigan where corruption is an art form, if that makes a difference.
When you are in no position to make an emergency decision, the free market has already taken care of that for you.
Competition between facilities will equalize rates as in every other market. Yes, one may be a bit higher than the other, but there’s usually a reason that the market can use as justification.
Outrageous inequality simply won’t be tolerated as once people are paying the freight, they force reasonableness over a very short period of time.
Any insurance premiums the average person pays for catastrophic coverage must come down as the insurance provider is no longer covering mundane issues. Once the insurance mafia’s income is reduced, they can’t afford outrageous catastrophic claims, so they become efficiency and cost advocates instead of the current system where they call ALL the shots.
It is a Health Care Industry, not a Healthy Cure Industry.
After a post-operative exam and biopsy of a PAP test, I was sent to a specialist who removed a growth during an exam, without anesthesia per my signed agreement. (Five to ten seconds, I was told. I figured I could cope for that long! I could. Barely.)
There was no co-pay since it was “referred” by my operating surgeon.
My husband tracks all my medical expenses and told me the doctor charged $984 for that endeavor. However, the office failed to list the CODE required by federal law for Humana Military insurance (TriCare) to pay. They denied it. My husband informed them WHY it had been denied (the fucking ID number for the procedure, stupid ass! Insurance, especially government backed insurance*, doesn’t move its bowels without the correct ID number!)
Here it is six months later and we get a letter from a Collection Agency for the “remainder” or balance of the bill. Eventually, the insurance paid $197 and that is that,right? But, a lot of small medical companies are completely winging it on office staff (and this pathology group is small: 7 doctors, 3 staff and you know none of the doctors are doing any real work so the staff is overworked). They get a rejection and don’t know what to do except send it up the chain, where that person sends it to collection. That’s not how it is supposed to work but NOBODY DOES THEIR JOB in the medical billing community. We got multiple billings for procedures listed in different ways, but never with that stupid CODE. My doctor got paid because his nurse does all the paperwork. But in a big oncology lab there’s probably a LOT of paperwork… you need more than a 7:3 ratio, in my opinion. But, office staff costs money, doesn’t it?
So, this is an example of how a billing for a thousand dollars ends up costing the taxpayer of lot more than a thousand dollars… Who do you think pays for all that miscommunication and legal wrangling?
*The final step for any of my medical billing agencies is the Veterans Administration, which is “on the hook” for the hernia repair mesh in the early 90s. Their payment letter comes with a nice final paragraph, which reads:
This is all you are getting. Period. Signed the U.S. Department of Defense and Veterans Admin.
That’s paraphrased.
However, if I didn’t have that letter? I’d be facing a collection agency instead of my husband calling them and threatening to sue. Weird.
Oh, it cost SOMEBODY a wad of money… tens of thousands of dollars. Just not me.
I’d submit it is
The Sick Care Industry.
Caring for sick people is profitable.
Healthy people, not so much.
Follow the money.
Edit Add:
In my town, there are 3 major hospitals, competing vigorously to capture the sick people’s money. It’s lucrative.
Each of the 3 have grown and expanded exponentially the last 2 decades, gobbling up real estate, expanding their business footprint, and advertising why they are the better choice.
Some workers there are grumbling. Corporate only cares about the profit bottom line, and to hell with a full staff in the various departments.
Burnout frustration is rampant, with Drs. and RNs.
Ditto, radiologist staff…CT, MRI, and Ultrasound techs.
Avoid hospitals as much as possible.
Not every medical professional graduated with a 4.0 GPA or higher from med school.
And new nurses are getting fast tracked. Muh diversity, too.
Do due diligence, when a caretaker wanders in to administer a RX or an injection or a procedure to one of your loved ones.
Mistakes are common, unfortunately.
What a mess.
Government for the corporations, by the corporations.
Even if Trump wins a second term and republicans retain control of the senate – thereby stalling Single Payer for another few years – unless the government ends the fraud and collusion in healthcare (which is extremely unlikely), we WILL get Single Payer. It doesn’t matter whether it’ll be worse than what we have. It’s like those poor bastards at the top of the World Trade Center on 9-11. When the fire gets hot enough, you’ll jump out the window.
I just called for a simple appointment and the wait is 3 months; before Obama, it was 3 days. The co-pay has more than doubled. After the dollar reset and the GSM cold sets in, if Republicans lose the Senate, we ain’t seen nothing yet.
Agreed but the Republicans are as bad as Democrats. They are just camo-communists. They cover their tracks better.
here’s something else hospitals are doing to jack up rates–
be aware of this–
observation status
TO OUR AGENTS: HELP YOUR CLIENTS UNDERSTAND “OBSERVATION STATUS”
Observation Status is a designation used by hospitals to bill Medicare.
People who receive care in hospitals, even overnight and for several days, may learn they have not actually been admitted as inpatients. Instead, the hospital has classified them as Observation Status, which is an “outpatient” category.
Since March 8, 2017, hospitals have been required to give patients the Medicare Outpatient Observation Notice (MOON) within 36 hours if the patients are receiving “observation services as an outpatient” for 24 hours. Hospitals must also orally explain observation status and its financial consequences for patients. The MOON cannot be appealed to Medicare.
Outpatient Observation Status is paid by Medicare Part B. When hospital patients are classified as outpatients on Observation Status, they may be charged for services that Medicare would have paid if they were properly admitted as inpatients.
Most significantly, patients enrolled in Original Medicare will not be able to obtain any Medicare coverage if they need nursing home care after their hospital stay. Medicare only covers nursing home care for patients who have a 3-day inpatient hospital stay – Observation Status doesn’t count towards the 3-day stay. (A Medicare Supplement would also not cover the cost)
(A three day prior inpatient hospitalization does not apply to Medicare Advantage plan members, however, referrals and plan authorizations would be required)
Careful there… ‘Observation status’ is a scam perpetrated by bureaucrats and politicians, not hospitals. In 2011, politicians and regulators at Medicare decreed that Medicare was paying too much for hospital admissions. So they rewrote the definitions, inventing this new moniker called “observation status” out of thin air. Lots of things that formerly were called “hospital admissions” (pre-2011) are now called “observation stays.” Of course Medicare pays less money for “observation stays” than it does for hospital admissions. Post-2011, Medicare expenditures on hospital admissions (according to the new definition) dropped by almost half! The politicians patted themselves on the back for “a job well done” and bragged to the voters about “controlling costs.”
I assure you, doctors and hospitals are as non-plussed about the “observation status” debacle as are patients. The associated Medicare regulations are nonsensical, arbitrary, and contradictory. Tremendous excess paperwork involved.
Let’s be mindful to pin the blame where it belongs: upon Medicare bureaucrats and the elected officials who created this boondoggle.
…because the health care industry bought legal carve outs from the politicians. Fixed t for you,Tylers.
How many people said Pence a while back?
I can recall but a few.
—
How many people said Pence a while back?
I can recall but a few.
https://www.deseret.com/utah/2019/11/5/20949767/mexico-mormon-polygamist-massacre-mothers-children-killed-ambush-latter-day-saint-settlement
Civil War just canceled
So hard to see why working whites are interested in some sort of universal health care system. I mean, they have to pay for the completely free ‘socialized’ care for the illegal aliens and diverse welfare parasites, while being unable to afford care for themselves.
Completely baffling.
As far as costs exploding, it’s the same thing we see in California with housing. The majority of people in rental housing have their rent paid by the State. They are completely detached from economic reality through welfare – costs can rise until the system collapses.
The working whites are being ground into dust to pay for it, so we’re starting to see whites fleeing California in large numbers.
There are many drivers of medical care – Insurance, Lawyers, 0bamacare paperwork requirements, FDA rules for new drugs and lack of pricing transparency, to name a few. Mostly it is like ZigZag says.
My coworker had a mammogram and found a spot, had it biopsied, it was nothing. The cost was $38,000. Her neighbor went and got a tetanus shot. One shot, $3800.
did your neighbor go to the emer room 4 the tetanus shot?
i got one this year at the publix pharmacy ,$75 & the insurance co. paid it all–
Below is the only man I’ve read who has accurately “diagnosed” the problem in detail, and for years. Our system is a handout at government gunpoint to the healthcare cartel. I can’t decide which is worse, a universal healthcare death panel or a fascist system where they take your house if you can’t pay 100k for a standard procedure.
Get busy dying.
http://market-ticker.org/akcs-www?post=237300
i believe that another problem that keeps the healthcare industry from being reformed is the fear that politicians have of the pain & bad publicity it will temporarily inflict–
there is no way to reform healthcare w/o making patients pay more,along w/deep cuts in employment-
#1 reason it will never be reformed willingly: It is historically 4% of GDP, now running near 20%. Almost all of the growth is in positions where not one second of care is provided – hospital administrators, paper pushers in doctors’ offices, CSRs at insurance companies.
10% GDP reduction is the general rule of thumb for a depression, 20-25% for a Great Depression.
That’s why the politicians will never willingly fix it.
The very first chart did not make sense to me.
All I know is cost rates for insurance have been going up like a
rocket since 2009. I am NOT aware of any decrease in costs.
I have not had health care insurance since 2014 because:
I need to eat
I want a roof over my head
I need to put gas in the buggy
I like to stay warm in the winter
After Federal, State, local, property, SSI, medicare taxes-
ain’t much left.
That makes Health Care Insurance a luxury for the rich.
One of the greatest rhetorical tricks of the past 50 years was to convince people that all the money they spend writing checks to a massive corporation for nothing is “health care”.
Stunning, really.
First because the term is an oxymoron. No healthy person requires care. Illness care, wound treatment, pain management- that’s what people pay for and if only people requiring those things were compelled to pay for their treatment we wouldn’t be having this discussion.
The cost of keeping massive insurance companies in skyscrapers filled with paper pushers doing their best to deny coverage to their policy holders and pay out mind boggling bonuses to executives for reducing payouts while maximizing premiums are why costs are exploding.
HSF, you touched on an inadvertent thought I had as I was busy solving a “crisis” today for a bunch of CPAs. (Funny, how people so “educated” can be so engaged by their Limbic systems. But I dugress.)
I believe the primary reason why people like me — well-educated engineers — are throwing in the towel in American IT is because there are too many service-oriented paper pushers and too few devoted to STEM. Bear with me for one second.
I was eating lunch with my wife during the “crisis” period, and it dawned on me that one of the myriad reasons China is eating our lunches is because they are devoted to STEM, almost to the point of obsession. They understand cycles. They understand how to boil a large problem down into multiple small problems, and to eat those bite-sized nuggets thoughtfully. They live to produce.
Now, I am not excusing HOW they do any of the above. My observation was solely devoted to the sheer number of useless eaters this country has, from top to bottom. I do not want to say who my employer is. I will, however, state that they are a company everyone would recognize by name, and who produce very little.
Our healthcare/medical industry is a gigantic consumer. Doctors may be good from time to time, but they don’t produce a single thing. Our financial industry? Consumers, unless one considers quants as “productive”. Hospitality? Consumers.
The few (relatively speaking) Americans who produce anything (farming, software, computer chips, machinery, etc.) are getting sick of people who need them. And I don’t just mean taxation. It is so PAINFUL to listen to a business executive explain why they made the ignoramus decision to hire an entire offshore India team, only for them to produce total shit (that I told them would happen), and then ask me to perform my magic (their words) to save a multi-million dollar problem.
I can’t wait to farm full-time. It’s rewarding, it’s soothing, and I am my own CEO. I’ve found that when I know I can do a better job than anyone in the chain of command above me, I lose total respect for them and the very system that supports the Peter Principle.
farmer,
if you’re still on this thread & are willing to give out personal info,how much did the total cost of your accident run & how much did insurance cover?
We are not insured, we pay cash out of pocket for our medical needs.
The E.R. visit (my son drove me, no ambulance) was just over $3,000. That included triage, X-rays, temporary cast, and pain treatment.
The operation (outpatient) and the follow-up visits (there were three in total) came to $45,000.
Because we pay cash out of pocket the hospital gave us the lowest negotiated rate they give insurance companies which knocked it down to 16K. My wife advocated for additional relief seeing as how the main breadwinner and self-employed patient did not qualify for any of the myriad aid packages out there for the rest of the lumpen proles, like unemployment, disability, etc. They had to do a deep dive into our personal and financial records, tax returns, military service, dependents, etc. and they came back with $6,000 payable in monthly installments over two years. My wife gave it one last appeal and they finally settled on $3,000 payable in monthly installments over 3 years- $100 a month.
So what was roughly 50K wound up being just over 6K. Extremely reasonable considering the quality of care I received. Next week I am personally delivering a full beef order to the orthopedic department to be distributed to the entire staff as a thank-you for treating me so well both as a patient and as a human being.
https://thehill.com/blogs/blog-briefing-room/news/469538-10-people-hospitalized-in-oklahoma-after-insulin-given-instead
The best thing that one can do for one’s own health is to protect oneself from the U.S. Healthcare system. It is costly, dangerous and ineffective. My suggestion is to get a good holistic doctor and pay by the visit. The emphasis of holistic medicine is on prevention and treating underlying illnesses as opposed to symptoms. Holistic medicine considers nutrition to be a major factor in maintaining good health. If one begins a holistic regimen at a young age in particular then the chance of developing the all too common diseases associated with aging are greatly reduced. What people are paying in premiums and with ridiculously high deductibles my advice is to save the money and put it in a special account for future emergencies that might require more serious medical interventions such as surgery.