]]]]]]]]]]]]]]]]]]]]          COST CORNER        [[[[[[[[[[[[[[[[[[[
                          By T.A. Dorman, M.D.           (2/25/1990)
                           Freeman 93401DORM

I Can't Afford to be Sick!

       For half a day in hospital and a minor surgical procedure, the bill
was $7000. Now, why is that? After the introduction of Medicare,
hospitals were paid on a cost plus basis. This provided an enormous
incentive to increase costs. There is a natural desire to provide
patients with the best. There is also a natural desire to make a
profit. 1) Expensive care probably reduces the malpractice risk. 2)
Expensive care involves sophisticated equipment and drugs. The
enterprise spreads to "our friends" in the pharmaceutical and medical
instrument industries. This trend has lasted 20 years. 3) The
insurance companies catering to the non-Medicare population followed

   In any case, when the cost is frighteningly high, there is less
quibbling about premiums.  It is premiums which fill the insurance
coffers. The whipsaw of regulations congress has bestowed on us
includes: 1) the DRG phenomenon (hospitals are supposedly paid
generically by diagnosis), 2) policing for bounty, 3) the use of
informers, 4) cookbook medicine, 5) retrospective second-guessing, 6)
terrifying the doctors through bureaucratic ultimatums. These are
destroying initiative, destroying qualit y health care. The doctors
are just trying to stay out of trouble. This is not a good scene if
you are sick!  As for the cost, the hospitals get less for Medicare
cases but the system runs on. Here is how it works... A large portion
of the hospital e xpense is what has been euphemistically called the
standard of care which is a highly elaborate, stylized ritual of
investigations (medical tests) and record-keeping, quite
disproportionate to the reality of every day life. It is a little like
going to church in Sunday best, but there is no money for food. The
private insurance companies continue to pay on a cost plus basis. As
hospital occupancy is more than half Medicare, money is lost on them.
It is recouped by charging the hospital expenses to the remaining
"private" customers. No problem for the insurance companies! They just
raise the premiums. The price of an aspirin increases a hundred
fold....  Where is this all going? More control. Control is the word.
There can be no doubt that the only way to allocate costs
intelligently is through the free marketplace. Seventy-two years after
the October Revolution the great grandchildren of the communist
reformers are reading von Mises, while here in America, the republic
of limited government, (remember Jefferson and Hamilton?) everyone is
bemoaning the lack of health insurance for the middle class employed.
"Thirty seven million Americans can't afford insurance", scream our
headlines. Of course they can't. What is your government doing to
those of us who are trying to hang on by our fingernails to private
practice? Medicare beneficiaries get notices approximately like this:
"You could have avoided paying this extra expense if you had chosen a
doctor who takes assignment..." The sub-rosa government of bureaucrats
in Washington is trying to herd everyone into regulated schemes. We
call this the alphabet soup: HMOUs, PPOUs, IPAUs and other
impedimenta. This is the message your doctor believes in: It is
cheaper and better for patients to have a private doctor. Your private
doctor is serving you, not the bureaucrats. If he is honest he is also
responsible to your pocket book. You can talk to him about what you
want to spend your money on and when.

                       *       *       *

Return to the ground floor of this tower
Return to the Main Courtyard
Return to Fort Freedom's home page