Healthcare costs explained

Healthcare costs explained

There are few issues today that are more confusing than health care. The subject of health care is politically polarizing, yet neither side seems to have a true grasp of the situation.

In a health care system such as ours, private insurance companies control the costs and premiums for the middle class, while government insurance, which is Medicare and Medicaid controls costs and premiums for the elderly and the poor. The providers of health care, such as doctors and hospitals, set prices for certain procedures at different levels. For patients with Medicare and Medicaid, the charges are reduced to the minimum possible and are paid by the insurance. Most of us pay into the Medicare program throughout our working lives. When providers set the charges in collaboration with private insurers, the charges are higher, and usually the customer pays part of the charges in the form of copays and deductibles, in addition to a monthly premium. Finally, the maximum charges are made to those patients who have no health insurance at all and must pay all costs out of pocket.

This is illustrated by a recent office visit bill of my own, in which the charges without an adjustment for the insurance company were $390, but after the insurance adjustment, I owed $140, since I had not yet met my deductible. An acquaintance of mine is in his twenties and is a freelancer (self employed) who makes up to $30000 a year; however, some months he makes hardly anything and others a lot, and much of the pay is in goods rather than liquid funds. He cannot afford a monthly charge for insurance along with a $6000 deductible, and he is young and healthy, so he has no insurance. He would have to pay the full $390 for the same doctor visit at which I paid $140. Thus, for one reason or another, many who cannot afford even government insurance are charged the most. Some can never pay their bills, which raises the price for everyone else. 

The resulting inequity of costs and coverages between various types of insured and uninsured patients causes many doctors to set up shop where they can make the most money. Often retirement communities and poor areas are left without adequate care from doctors, since the rate of return for services by doctors and clinics is at the low rate set by Medicaid or Medicare. In richer communities, a doctor will make more money for the same services. If the charges were the same for everyone everywhere, there would not be a shortage of doctors in rural and retirement communities.

The average cost of insurance in the US is around $10,000 per year for a family, not including deductibles and copays. Employers also carry part of the burden of insurance, since they must provide expensive plans for their employees. Why, then, does everyone complain so bitterly about the idea of government sponsored health care for all?

The problem is often in the presentation. Insurance companies and providers are quick to point out the cost of government sponsored insurance in terms of the federal or state budget. They can then say that it will cost billions of dollars. They raise the ugly idea of new taxes, and the nation cringes and backs off. But suppose we make it simple. Suppose, rather than a tax, we have sliding premiums for public insurance. Premiums would be paid according to income, and all expenses at the doctor’s office would be covered without copays and deductibles, no matter where the patient goes or who the patient is. This is not a horrible communistic plot, it is a way to provide health care to everyone without discrimination, and to bring about a healthier nation as a whole.

An example of how this works can be seen in our neighboring country of Canada. Canada is not a communist country or even a socialist one, yet its citizens do not have to worry about how they will pay for health care or if they will have to forego life saving treatment or drugs in order to pay for food. For the average Canadian making a wage in the $60000 range, about $5000 of their total tax bill will go towards government health care. This sounds like a lot, but in the US, we pay twice that much. Canadians may walk into an office for treatment or pick up their prescription without charge, while we struggle under massive deductibles and coverage inadequacies. The obvious inadequacies of our system of health care are never resolved because healthcare providers and insurance companies launch huge political campaigns and fill capitol buildings with lobbyists to prevent any changes to the system.

Insurance companies have lot at stake. In 2019, insurance company profits amounted to 35 billion dollars. There was also a merger between insurance companies and Pharmaceutical corporations, resulting in huge profit increases. Insurance companies, then, benefit by spinning government insurance as a very bad idea. They spend as much of their gargantuan profits on lawmakers and propaganda as possible in order to preserve their billion dollar cash cow. They force Americans to pay more for health care than any other developed nation in the world.

Will we remain at the mercy of our private companies, who rake in profits at the expense of the health of the American people, or will we have the courage to say enough is enough? Providing public health care for all will benefit small businesses and the old and the poor, the rural residents, and those in the inner cities.

 We will never be first in the world at anything if we cannot keep our nation healthy. An unhealthy nation is a weak nation, and we can’t keep our nation healthy unless we change the way we look at health care. It is time to implement new policies for the good of our people rather than for the good of the corporations.

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