I cannot believe some of the op-eds that are published in the Charlotte Observer. Do they have a fact checker? Shouldn’t the editorial board question the assertions of some of these writers?
The latest absurdity that was published in the Disturber was written by J. Edward Bell from the Charleston School of Law. His solution for affordable healthcare is to dump catastrophic illnesses onto Medicare. Here is an excerpt:
This idea can be the ultimate fix that makes health care affordable for most Americans.
Almost half of health care premiums are for catastrophic illnesses – the most expensive illnesses people experience. Two systems have developed to deal with these illnesses – the Medicare system for people 65 and older, and the system for everybody else.
People under 65 often are charged more than actual health costs because medical providers often take advantage of enhanced billing to recoup some of the costs they incur for treating people without insurance. These “cost-shifts” are variable costs that are hard to control, which leads insurers to charge a lot for premiums of people under 65.
But if you are covered by Medicare, the program pays actual costs to a medical provider. Because Medicare only pays actual costs, the overall cost of treatment for the Medicare patient is much less than for the patient under 65.
The difference in costs is amazing, according to research by the Charleston School of Law. Consider a patient under 65 who has an average catastrophic medical bill of $1.6 million. The cost for a Medicare patient with the same illness: about $320,000, or 80 percent less. That’s a savings of more than $1 million.
First of all, you can’t buy catastrophic insurance unless you are granted an exemption from the federal government, and once that is obtained you are limited to the exchanges and god forbid you don’t qualify for a subsidy.
Second, Medicare is the main driver for all healthcare cost. They set the standard. The Washington Post let the cat out of the bag back in December 2013. Here is an excerpt:
Economists believe that the Medicare prices are even more important than that massive scale suggests, because in the absence of a traditional market for medical services, the Medicare prices form the foundation for private insurers, as well.
That is partly because Medicare is such a huge player in the market, accounting for more than a fifth of the money spent on personal health care. But there is a second, possibly more important impetus: Because of the complexity of modern medicine, setting prices is an arduous, time-consuming task. Insurers save money by letting Medicare do the work.
To measure the impact of Medicare prices, Gottlieb and Jeffrey Clemens at the University of California at San Diego analyzed millions of claims to see how changes in Medicare prices were followed by changes in the prices that private insurers paid. The results were stark.
“Our results indicate that the private sector will copy Medicare’s pricing errors,” Gottlieb said. “On the flip side, they would gain when Medicare payments better reflect the value of what is being delivered.”
While that paper largely studied physician fees and outpatient services, other research published in May found that Medicare pricing for hospitals is similarly influential. The paper, by health care researcher Chapin White and published in Health Affairs, found that a 10 percent reduction in Medicare pricing yielded a 3 or 8 percent reduction in private prices, depending on the statistical method used
I published a blogpost back in 2012 about how Medicare and the third party payer system had distorted the healthcare market. Since the consumer/patient is factored out of the cost/benefit analysis, market pricing no longer exist. No one knows the cost of a procedure or for that fact an aspirin. Hence, we have hyperinflation in an industry whose pricing is determined by a government entity. And everyone wonders why no one can afford healthcare.
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