Monday, April 25, 2011

Healthcare Costs: Let the Sadists Rejoice

As politicians and other policy makers try to curb the costs of healthcare, the people who make their living from saving lives are no doubt trying to figure out how not to lose income without looking like heartless jerks. Odds are they also are trying to figure out how to take money from each other.

The folks in the boxing ring: drug makers, hospital owners and insurance companies.

The heavyweight is the hospital owners, even though their slice of the pie has shrunk 10% between 1980 and 2009, to 32.6% from 42.7%, according to the The Cost of Caring: Drivers of Spending on Hospital Care, from the March 2011 American Hospital Association. That’s 32% of $2,330.1 billion. [I BELIEVE THAT’S A TRILLION?]

And, just to complete the reporting, the drug makers’ and insurance companies’ slices have gotten lots bigger: drug makers’ take has doubled, to 10.7% from 5.1%.

As for the insurance companies, “since 1999 [to 2009] premiums have gone up a total of 131 percent, far more rapidly than workers’ wages [up 38% since 1999] or inflation [up 28% since 1999], according to a Kaiser Family Foundation study. 

It’s difficult to see how any of them will lose money. While insurance companies will likely continuing trying to control patient hospital stays, our population is getting older. You know the rest of the story. According to the AHA article, of the Medicare patients who had heart failure and died between 2000 and 2007, 80% were in the intensive care unit during the last six months of their lives. The per-patient bill hovered around $36,000.

Then there are our lifestyle issues. More people are obese, have diabetes, are hypertensive, have cancer …..

And then there is technology, and more and more of it. It may get people back to work quicker, but it also costs money: “The average spending per heart attack case rose from $12,083 in 1984 to $21,714 in 1998.”

And we’ve all read the stories about hospital staffing shortages.

As costs continue to rise, the country’s 1,000+ private insurance companies, let alone self-insured employers, will surely continue to scrutinize every procedure. But hospital administrators aren’t stupid: the losses they incur from patients who don’t pay, as well as from Medicaid, Medicare and the uninsured will be absorbed somewhere: How many hospitals have closed their maternity wings?

A law of physics applies: Every action has a reaction.

Paul Krugman, in his Times Op-Ed column last Friday, (April 22) wrote in support of the Independent Payment Advisory Board, an expert panel that would set spending limits for Medicare. Mr. Krugman says, “We have to do something about health care costs, which means that we have to find a way to start saying no.”

We? There is no we regarding healthcare. For the economic sadists among us, this is pure joy.

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