Some Health Care Insights

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David Goldhill had a great and very long piece on health care in the Atlantic a few years back titled, How American Health Care Killed My Father. The premise of the article is that Goldhill's father catches a hospital-borne illness while in the hospital that eventually leads to his death.  Goldhill argues that had America had a consumer-centric health system in place, his father's death may have been avoided. I don't feel like diving in the consumer-centric argument today.  But there were a series of excellent insights that I took from the article that I want to call out.  Regardless of where you land on this issue, it's an excellent read and you should read the whole article when you get a chance. In the meantime, here were some of the most interesting insights for me:

  • 100k people die every year from infections acquired while in the hospital
  • the U.S. government spends almost 18 percent of our GDP on health care
  • we spend 8 times as much on health care as we do education
  • health insurance is a unique type of insurance in that it pays for all of our health care expenses, as opposed to just catastrophes
  • this is the equivalent of paying for our gas with our auto insurance or our electric bills with our homeowners insurance
  • most pregnancies are planned and known about many months in advance, yet they're financed the same way we finance an unexpected catastrophe
  • the result of this unique insurance coverage has contributed to high costs; the average consumer could care less about the price of even the simplest procedure
  • group health insurance was introduced in 1929
  • employer based insurance grew significantly during WWII, when wage freezes prompted employers to expand other benefits as a way of attracting workers
  • by 1954 most people still didn't have health insurance but that's when Congress passed a law making employer contributions to employee health plans tax deductible without making the resulting benefits taxable to employees.
  • this led employer funded health insurance becoming by far the most affordable option for financing any type of health care
  • for every two doctors in the U.S. there is one health insurance employee
  • in 2007, the average health care insurance cost 12k per family up 78 percent since 2001
  • the average American will pay 1.77 million dollars for health care, assuming growth rate of 3 percent a year, from age 26 to age 85
  • hospitals may be shifting costs inappropriately to the ER to show the losses/investment they're making in charity care as most ER services aren't paid for
  • when looking for an MRI he learned that prices vary widely between hospitals and that some hospitals wouldn't quote a price until the service was actually ordered
  • some hospitals won't quote a price unless the patient is uninsured or is seeking financial assistance
  • it's odd that it's been such a struggle to get medical records online, but that the billing for services that are included in that health record is all online and extremely sophisticated
  • an individual would typically pay 2.5 times what an insurer would pay for the same treatment
  • the price of LASIK treatment, an uninsured procedure, has nosedived over the last several years because it is subject to the forces of competition.
  • conversely the price of an MRI hasn't changed, it's paid for by insurers and Medicare and thus not subject to traditional market forces that would make them less expensive
  • the government has proposed investments in electronic health records of $50 million, only 2% of the health care industry's revenues
  • but who's to say that doctors will adopt them, most of the benefit of this would go to patients, not providers, and patients aren't the real customers, insurers and the government are
  • the bill for his father's five week stay was $636k -- $5k per night for the room, $145k for drugs, $41k for respiratory services,
  • his family's share of the bill was only $992, the rest was paid for by Medicare at some huge discount