I keep hearing talking heads in the media refer to “healthcare cost” as being synonymous with the price of health insurance premiums.  This means only one thing: these professional “analysts” are as out of touch as most Americans about the cost of healthcare.

The price of your insurance premium is not the “cost of healthcare”.  It’s the price of your personal insurance determined by a number of factors, most specifically, where you work.  In order to get this real price you have to factor in deductibles, co-pays, co-insurance, premiums payments.  There are many variants based on employer and plan.  That’s your price of being insured.

If you think the price of your insurance is bad, or maybe you don’t if your employer is kind and hasn’t jacked your premiums to absurd levels, the cost of healthcare is an insane number.  Rising annually at 8 times the rate of inflation.  Let’s put that into perspective:

Most people have health insurance and auto insurance.  If you wrecked your new Nissan Sentra in 1997 the cost of a replacement front bumper was about $430 installed.  20 years later the cost to replace the front bumper on a new Nissan Sentra is about $642.64 adjusted for inflation, true cost researched… $612.00 installed.  So the cost of replacing a bumper on this particular car has actually gone down verses the rate of inflation.  But still car insurance premiums have risen.  More drivers, more wrecks, most cars don’t enjoy such affordable parts as a Nissan Sentra.  The overall reason for the rising cost of auto premiums is also…. healthcare!  But the example will work regardless.  Because of the somewhat stable cost of car repairs (labor and parts) and increasing safety mechanisms in cars, auto insurance premiums have managed to stay within a reasonable scope of consumer expectations.  Auto insurers don’t have to charge more to make money because their costs aren’t rising exponentially.

What if I told you that because of an increasing number of car crashes, plus increasing cost of replacement parts from the manufacturers and the workload presented to shops it was now going to cost you $8000 to replace the bumper on your new $19K Nissan Sentra?  Most people would cry foul on the part of all those involved: bad drivers, greedy manufacturers and the body shops.  Now imagine most of this increase comes from the rapid, unexplained, increasing price of the replacement parts.  Does that make it better?

Now lets look at health insurance.  Those evil health insurance companies raising premiums right?  They’re “increasing your healthcare cost”.  WRONG.  The insurance companies are certainly increasing your premiums.  Health insurance companies are not the ones increasing the cost of health care.  Unlike my hypothetical example of a fictitious increase in the price of car parts, the exponentially increasing cost of health care products and services are very real.  Especially in the world of pharmaceutical and medical devices.  I worked for Glaxo Smith Kline.  When pharma companies tell Americans we have to pay up to 20 times more for the same medication as other nations to cover their research and development cost THEY LIE.

I’ve personally witnessed almost $1 million US dollars spent on an IT pharmaceutical initiative to decide not to proceed, scrap it.  I’ve seen millions spent on application development that could have been done at half the price with half the bureaucracy.  Then add the increasing cost at the provider level.  Last month my wife received a bill from an outpatient procedure that lasted under 30 minutes.  There was a $1600 “facility fee” as a line item charge.  We’ve asked but still haven’t received explanation as to what this fee really is.  If the “medical billing specialists” for the hospital cannot tell us, who can?

Billing at most medical facilities has transformed into an open ended contract to gouge patients in the United States.  $20 for a Tylenol, $8 for the paper cup it’s delivered in.  All of it has been joked about like the US governments $3000 toilet seats.  But it’s not funny.  Right now health insurance companies are going out of business due to the ACA.  The math doesn’t work.  Imagine telling the auto insurance industry they can’t increase premiums for bad drivers, all other drivers will have to cover the cost for those who wreck twice a year.  And hypothetically imagine the parts manufacturers raising their costs by 500% in the next 4-6 years and then telling the insurers they can’t increase premiums.  That’s almost exactly what is happening to the health insurers, they’re being told they can’t adjust for special conditions or the rising cost of the bills they receive from hospitals.

We don’t hear our politicians or much of the public yell and scream about the rising cost of health care at the provider level.  The “free market” is supposed to handle it all according to our stalwart, conservative Wall Street pundits.  Free market?  In what “free market” do we sign a contract stating we will pay before any service is rendered without first being presented with the price?  What other “free market” product do we consume that in the middle of life or death situations?

From Injury to Insult

So now we just accept that it must be costing these hospitals a fortune for these services they render.  Who cares… insurance companies pay it right?  Those hospitals are struggling so much that they need a prescription of architecture!  Yep, architecture.  Next time you’re in an ambulance make sure the hospital you’re going to has a large marble foyer and uncomfortable retro furniture.  Not the ER waiting room, the lobby.  Don’t forget to check on how many million dollar water fountains are out front.  I’m told water fountains do miracles for dislocated shoulders.  Make sure you’re in a hospital that sponsors a holiday “festival of lights” around Christmas time.  Make sure it costs them hundreds of thousands to put on as a marketing scam because you know, hospitals need to advertise.  Why do hospitals have marketing departments anyway?  If there’s anything I don’t care about feeling institutional personally, it’s a hospital.

And now for the insult.  Somewhere sitting in a $20,000 recliner there is a person very happy to be making big money off Americas declining health.  The ever loving, business savvy, investment driven shareholder.  Oh yes, don’t think for a minute I’ve left out the reason for the profit motive.  Yes, go on and rant about the health insurance CEO’s ten million dollar salary.  Peanuts compared to the earnings of a Saudi Prince who hold’s a tight position in Healthcare Corporation of America, the nations largest for-profit healthcare provider.  Who was it that founded HCA?  Oh… that’s right.  None other than the father of Republican Bill Frist, three term Senator from Nashville.

While for-profit insurance companies are a problem in the health care equation, having started a price gouging war with providers, they are far from the reason Americans pay more for healthcare with lesser outcomes than any other nation.  Look no further than your next prescription bottle or emergency room bill.  The costs are outrageous and climbing as these entities gouge consumers for returns to shareholders.  Nothing demands stakeholder capitalism more than healthcare.  Before you comment regarding the pay doctors, nurses and providers receive learn the difference between compensation and profit in stakeholder economics.

The concerning part is the silence.  You don’t hear many legislators talking about the real reason behind the rising cost of care because the industry is big money.  One thing any elected official in America will not work against is big money.  It is the nations Achilles heel and it’s going to get cut, we’re going to fall.  The majority of financiers, accountants and mathematicians agree: single payer is the only way to stop the end of the US economy.  It’s the only math that works.  Remove the profit motives from healthcare and we will survive as a nation.