In an article published on the 11th JAMA appears to have accidentally pulled the curtain back on what I've been talking about for quite some time -- but with the credibility that comes from the primary organ of the American Medical Establishment.
The intent of the article was to discover if they could obtain "up front" and transparent, all-inclusive pricing for a rather common surgical procedure -- prosthetic hip replacement, which is known by its medical name total hip arthroplasty.
They contacted the 20 top-rated orthopedic hospitals in the US along with two random ones in each state, a sample of 120 hospitals. They then attempted to obtain pricing for this elective procedure, using a standardized script stating that the patient was a 62-year old grandmother. Each hospital got 5 bites at the apple to provide a complete price.
Only 45% of the top-ranked hospitals and 10% of those randomly selected were able to provide such a price after five attempts each.
Worse, the range of the procedure in cost was from $11,100 to $125,798, with top-ranked hospitals neither being the low or high bids, but having representation near the endpoints of both (12,500 and 105,000.)
Now this is where the rubber hits the road, however, and where the debate must be centered if we are ever to resolve the medical cost problems we have today.
This particular procedure is one that is reasonably common among older Americans. Many who require it need to have it done in no small part because of personal lifestyle choice -- specifically, they are and have been fat for a long time, and the extra mass they're carrying around increases stress in these joints. This may be politically incorrect to point out, but it is also the truth.
However, at the lower end of this cost scale most Seniors can afford to pay for the procedure out of their pockets. At the higher end of the scale few can.
The higher end only exists because of cost-shifting.
Nobody would pay 10x as much for a procedure if they knew in advance what it would cost, and had the other alternatives available to them, unless they were convinced that the quality was dramatically superior. But since some of the top-rated hospitals were in fact at the bottom in cost, there is no argument that can be raised that price is related to quality.
I recently asked if my readers could afford to pay cash for their medical expenses if they were 1/5th of today's price. Now you see why I asked -- they are available for 1/5th of today's median price, right now, right here, today - and I'm not talking about just "routine" office visits either.
This procedure is major if rather-common surgery!
The vast majority (95%) said yes. Some "Yes" responses qualified those answers to include only "routine" procedures. But I'm willing to bet that most people could manage to come up with $10 grand for a procedure like this, if they had to. They might not like what they have to do in order to accomplish it, but they are unlikely to be bankrupted by $10,000.
Those who argue that they would be also couldn't buy a reasonable used car, say much less a new one. And remember, that you pay cash doesn't mean you have the cash -- it just means you can access it (people do this all the time when they buy cars, roofs for their house and similar.)
Indeed, such a procedure is not all that different in price than that for something like a new furnace, or a roof. Yes, it's more money, but not that much more money. And it's not much more, if any at all more, than a decent used car. Yet we don't expect other people -- or the government -- to buy our furnace, our roof or our car.
So why does it happen with medical care?
That's simple -- we have allowed a system to form that outright swindles us when it comes to medical care. At $100,000+ for a procedure that we can have for $10,000, nobody would buy -- unless they had no knowledge of the $10,000 procedure, or of how much the $100,000 one would cost until after the surgery was done and it was too late to negotiate.
In any other sort of business this sort of price obfuscation and game-playing would either put the provider out of business or lead to criminal racketeering prosecution. But it doesn't here, because we have all been "conditioned" to allow it, including most-especially our elected representatives who have written into the law exemptions and dodges.
In the real world when I provided services I was expected to post my prices and when bought in bulk I was expected to competitively bid for those contracts. If I screwed someone to the tune of 10x the price after the fact, and made it difficult or impossible for the customer to figure out what he was going to pay until after the fact, I would have either been run out of town or prosecuted and thrown in prison for criminal conspiracy, racketeering and fraud.
Our problem with the medical system is not one of Medicare or Medicaid. It rests here, in the foundation, where we first put in place a cost-shifting system that allows medical providers to pull this sort of crap without immediately going out of business or winding up in prison.
This would just be an awful scam but it is in fact far worse, because the price growth that this system has engendered as these greedy jackasses continue to escalate their price demands, all under cover of darkness and backed with the gun of government to force you to pay for those who have no money and thus care not what the bill is have driven Federal Medical spending alone from $53 billion in 1980 to over $850 billion in 2011, a 9% compounded rate of increase.
And while last year the CBO says this spending has abated somewhat, that's a short-term dislocation caused by the game-playing surrounding Obamacare -- and it won't last. We already have reports of 100% premium increases being filed for this year and next among private plans, wiping up any supposed "relaxing" of the cost curve from last year and in fact accelerating what is a highway straight to fiscal Hell.
There is no point in being involved in a political party or with any political body, representative or other person in the political context unless the largest component of what they are addressing, not with words but deeds, is the complete and immediate dismantling of this edifice.
It is a waste of your time to be involved otherwise, as the outcome will not matter if this is not addressed. Both government and private industry will see their funding models and capacity to pay collapse within the decade unless this is halted right here, right now, today.
It's that simple folks.
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