02 Dec 2006
The Medical Insurance Crisis

A Report from the Frontlines

What do you do when you have a medical emergency with no medical insurance? And how can you ever pay the price?

Kris began suffering from some pretty severe abdominal pain yesterday - it was so bad she scheduled a doctor visit for the afternoon. And when Kris volunteers to go see a doc, it has to be pretty bad. At the exam he poked on the right side of her belly - and nearly sent her through the roof. Instead, however, he sent her to the emergency room, suspecting appendicitis. We have no insurance.

At the hospital, the surgeon took a closer look. All the classic symptoms were there except one: vomiting. She hadn't hurled once, and that's very rare indeed when your appendix is exploding. So he wanted a further look before slicing her open like a ripe fruit - he ordered a CAT scan.

And lo - it was not her appendix, but a rather large and inflamed ovarian cyst - benign, not life threatening, and fairly common. Well, except hers had twisted about to cause some really intense pain. The treatment: a prescription for ibuprofen. Advil. She went home about 10.

We were extremely lucky - no surgery. But the bill will still be staggering. And if she'd have required an appendectomy, we'd have probably spent less money and gotten better terms had we purchased a new car.

This is because hospitals negotiate with insurance companies (including Medicare and Medicaid), while the uninsured pay the full price. And the full price is used as a baseline for the "discounts" given to insurance, and so is actually inflated way over the real cost+profit price of the procedure. And I mean way over:

The hospital where Ms. Nix was treated, New York Methodist in Brooklyn, typically bills HMOs about $2,500 for an appendectomy with a two-day stay, compared with the $14,000 -- plus doctors' fees -- that Ms. Nix was billed. The hospital gets paid about $5,000 from Medicaid, the state and federal health program for the poor, and about $7,800 from Medicare, the federal program for the elderly, for the same procedure.

Essentially, the less you are able to pay, the more you are charged.

From the hospital's point of view, this makes perfect sense: since they have to give discounts to insurance providers in order to be listed as an approved facility and thus gain business, they have to set their "real" price arbitrarily high in order to stay in business. Unfortunately, sometimes real people are charged the real price.

I'm not the first to note this insanity: but the "solutions" proposed to fix it are going to be worse than the disease, to use a really inappropriate metaphor...

Medical price controls? Price controls on any commodity are always a disaster in a relatively free market system - they lead inevitably to shortages and black markets.

National health insurance, a la Canada or Britain? Do a bit of Googling on those and you'll soon understand why they're so bitterly opposed by so many folks - they don't exactly work too well in practice, and in fact make our current system look damned attractive. Folks from both countries routinely come here for treatment at full price - because at least they can get the treatment they need here.

The only possible solution I can see if the elimination of medical insurance altogether - including Medicare and Medicaid. Insurance fundamentally skews a market - buying insurance is essentially buying a future commodity, purchasing something that the seller has not produced and that you can't know if you'll need. Perhaps someday I'll take the time to flesh this thesis on futures trading out to it's fullness, but I am convinced that trading in futures of any sort, be it corn or medical services, has introduced a serious flaw in the marketplace that will inevitably lead to it's destruction.

This would force hospitals to set and charge realistic prices - and it would insure (pun intended) that the Emir of Kuwait and Bob from the Bronx paid the same amount for the same service.

But at any rate, I'm realistic enough to know that it'd be politically impossible to get rid of insurance - even more politically impossible than it would be to pass a national health insurance bill. I can also assure you that as this crisis grows, the pressure on the government to "do something" will become more and more intense. And they eventually will. And I'll bet that we'll soon have our very own governmental medical bureaucracy that'll make us long for the good old days of HMO's and Medicaid and $20,000 appendectomies for the uninsured...

In the meantime, I've gotta get up to the tree farm and see if I can earn another $30 from my feed dispenser. I've got a $7000 medical bill to pay now ....

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