[ExI] Medical Costs

Lee Corbin lcorbin at rawbw.com
Tue Feb 19 04:45:11 UTC 2008

Stuart writes

> Well if you saw how much a hospital bills insurance companies for a
> piece of gauze, you could get the feeling that the medical industry had
> that attitude. It is a very strange industry to say the least.

The medical industry is "strange" only because a disconnect has been
created between who receives the service and who pays for it.

If a *patient* received such a bill for a piece of gauze, of course he'd
be outraged by it, and he'd make sure that the doctors and the 
hospital felt his pain---and most importantly of all, he would
take his business to another doctor and another hospital. But
it's only an *insurance* company that gets the bill---and try
as they might to protest and to try to force doctors and hospitals
to economize (or forego procedures)---it finally is easiest to just
raise their rates.

Later on, for all things it will be only the *government* that gets
the bill, and the bureaucrats will find that the easiest path is just
to raise taxes.  Luckily, less than half of the voting population
pays 95 percent of the taxes, and so the electorate won't have
any problem with higher taxes.

> Most hospitals are classified as not-for-profit corporations for tax
> purposes although huge revenues are generated and quickly dissipated
> before tax time.

What's your explanation for why this dissipation occurs?

> The federal government indirectly sets the costs of medical care
> by negotiating Medicare contract rates with the hospitals.

Only a free market is capable of delivering the economies that
we need so bad.

> Hospitals bill private insurance for about twice what it charges the
> federal government for any particular service. The insurance companies
> turn around and typically pay the hospitals between 60% and 80% of what
> they get billed for and the hospital eats the remainder.

It's a real mess, all right. But from your figures (thanks for the
descriptions) it looks like the hospitals still get more from an
insurance company that they do from the government. Doesn't
this mean that after the U.S. socializes, the government will
have to get charged more?

> Of course if you pay out of pocket, you pay the full "retail"
> rate. So in what other commodity does the government
> contract rate for that commodity serve as a *minimum*
> price for that commodity? Certainly not hammers and toilet
> seats in the pentagon.     

Right..., I think.

>> The nice thing about having individuals face the costs themselves
>> is that we obtain a very clear first cut on necessity.
> Right, people are the best judges of whether they need medical care or
> not.

Heh, heh, I get the sarcasm :-)

> Which is why cancer patients end up being diagnosed too late for
> surgical resection and macho men having heart attacks insist on driving
> themselves to the hospital.  

You sound as though you want to take this freedom away too.
You'll want to be forcing those macho guys to get checkups
whether they want to or not? 

I admit that medical care will be better if people's choices in
the matter are taken away. I mean, even after you make cancer
diagnosis completely free, people will still face "costs", e.g.,
the inconvenience or fear (or humiliation) of getting a checkup.


More information about the extropy-chat mailing list