As I See It: U.S. Healthcare is Overpriced

OPINION -- The money and markets section of the Gazette-Times on Aug. 13 reported that stock values of the top four health insurance companies had increased 31 percent this year (S&P 500 companies were up “only” 5 percent). This news is welcome for some but bad for all, a perverse byproduct of an overpriced healthcare industry.

We rarely can determine the likely cost of healthcare services before we receive them. Even if we could estimate price, when we are in crisis, we cannot comparison-shop. We essentially sign blank checks hoping that our insurance plan will cover the costs of care. The likelihood of adequate coverage diminishes each year as healthcare costs escalate and insurance plans degenerate.

Furthermore, medical bills from hospitals and pharmacies are grossly inflated, not meant to be real. A neighbor’s hospital bill for his hip replacement last month was more than $50,000 (typical in the U.S. compared to $10,000 under publicly funded care in England or Switzerland). The insurance company followed industry standards by allowing a secretly negotiated “provider discount” of $42,000 and paid about $8,000 to the hospital, leaving the neighbor to pay $176 out-of-pocket.

But many people you may know have no insurance or poor insurance, even under the Affordable Care Act. They face much or all of a fully inflated healthcare bill, and they risk their savings, credit ratings, dignity, and even their homes. Medical costs are still the leading trigger of personal bankruptcies. Most of the bankrupted families had healthcare insurance they had trusted to protect them.

Insurers make deals with pharmacies to involve insurance in prescription sales. Retail prices are set at three to six times those available in other countries and then “generously discounted” by the insurance plan. This appears to benefit patients but mainly benefits the insurance companies and pharmacies because of negotiated co-pay allowances. Some stores do forego these insurance deals and offer customers $4 a month prescription plans. They can do this and still profit because the average wholesale price for most drugs is 3.5 cents per pill or about $1 a month (see Medicaid.gov, NADAC price list).

Ideal insurance would have each of us contribute money into a single risk pool so that when any one of us becomes ill or injured, there is more than enough money to pay for our treatments. But health insurance companies are not in business to pool our money and save it for our rainy days. They are in business to harvest our money from insurance premiums, and use as little of it as possible on our care. Thanks to the Affordable Care Act, insurance companies can no longer directly refuse to insure us, but they can and do bar us from care through unaffordable deductibles, denied/delayed claims, narrow provider panels, narrow drug formularies, hidden exclusions, and by driving doctors to despair and early retirement.

Dr. Michael Huntington is a retired radiation oncologist. Dr. Bruce Thomson is a retired family physician. Both live in Corvallis