The True Cost of Health Care.
We spend a lot of time talking about the health care crisis in this country but I’m not sure we always know what the problems are. What we know is our health insurance premiums keep rising at a much faster pace than our wages. We know that the smallest of health care services can cost a great deal of money. As our insurance deductibles continue getting bigger, this becomes more and more evident.
I was recently talking with someone about the claims experience for a Maine employer. This employer had one person on their health plan with a heart condition that had resulted in over $300,000 in expenses in this past year alone. Despite the vast majority of employees having spent very little in health care services, this company is facing a significant premium increase largely because of one person getting sick.
You might argue that health insurance exists for this exact circumstance, but in my mind, the real question we often fail to ask is why did treating this patient cost over $300,000? Of course people will get sick or injured, but it is the cost of treating people that we are burdened with. Health care services are so incredibly expensive that one significant ailment can wash out the insurance premiums paid by tens if not hundreds of other people.
So the question I ask; does it really need to cost $300,000 to treat this patient? Even if you feel the answer is yes, after all the surgeon that performed the operation on this patient is highly skilled and the technology used during the course of treatment is by no means cheap to develop and operate. Does your argument still hold water if I tell you the hospital down the street with the world renowned surgeon charged less than $100,000 for the same treatment?
CMS, the Centers for Medicare and Medicaid Services, recently released data showing huge cost variation for the same services in health care. Our office was recently involved in a project that analyzed the cost of health care services in Maine which found the same wide variations in costs without a demonstrable quality difference; in fact, quality seemed to have no impact on pricing at all.
Here are a few cost variations to consider. A knee replacement in Farmington will run you over $64,000 while that same surgery in Portland will cost about $30,000. A standard lipid panel, the blood work performed at your annual physical, showed more than a 20 times variance from the lowest to highest price. A single shot to treat a stroke patient in a hospital cost the hospital about $4,500 to purchase. They charge over $11,000 to the patient at one hospital and over $18,000 at another hospital less than a mile away.
This is beginning to get at the root of our health care crisis. Transparency regarding the cost of health care services is step one toward understanding and ultimately lowering the cost of health care.