What Should Medical Care Cost?

You know the country is getting serious about healthcare reform when Oprah Winfrey puts her considerable media might behind the cause. In an episode aired last Friday–entitled “Sick In America: It Could Happen To You”–the all-powerful Oprah had Michael Moore on the show, along with a sacrificial lamb from the health insurance industry.

I have to admit that Oprah puts on a good show. She spotlighted four hard-luck cases who had their claims denied despite serious illnesses. In one case, the insurer actually backed off and paid the claim after getting a call from Oprah's staff. Too bad thousands of others who get jerked around by their claims reps don't have Oprah's muscle behind them.

However, another case spotlighted one huge blind spot in the healthcare reform debate–the prices medical providers charge. The case involved an individual who had a major procedure–a bone marrow transplant, if I recall correctly–for which the hospital was charging $250,000. The insurer only offered coverage up to $150,000 under that individual's policy. The hospital said, bluntly, come up with the other 100 grand, or we'll see ya later!

Oprah confronted another of her guests–Karen Ignagni, president and CEO of America's Health Insurance Plans, who had the guts to enter the lion's den. Oprah said, “Why not just pay the $250,000?”

My answer would have been that one could turn that question right around and ask, why won't the hospital just accept the $150,000 limit set by the insurer? After all, aren't THEY concerned about the patient's fate if they cannot afford a life-saving service? (Also, it wasn't clear whether the insurer suggested another facility that would accept the fee limit.)

A more fundamental question would be, how did the hospital come up with that $250,000 charge? Why not $200,000? Or $300,000? In fact, a big problem with “reforming” the healthcare system is there is no rational way to judge whether the vaunted “free market” is working when it comes to setting prices. Insurers are trying to make costs more predictable by negotiating set fees for service–at times unrealistically low, perhaps, but at least they are trying to establish some standard charge.

To just tell the health insurer–or any buyer, for that matter–to just shut up and pay whatever the provider asks misses a key area not explored by Mr. Moore or anyone else in this debate.

Indeed, Mr. Moore challenged Ms. Ignagni as well, asking why there must be a profit involved in providing health insurance. Why stop there? Why not hold the doctors and hospitals accountable to answer the same question? Should providers be allowed to charge whatever they want, and insurers simply be forced to pay? Before long, you won't have a private insurance system, and the government will have to pay for everyone. (And it's doubtful providers would relish that scenario, given what they get paid by Medicare and Medicaid.)

Everyone is going to have to give a little–maybe even a lot–if the healthcare system is to be fairly and effectively revamped so that we all have access to care at a reasonable cost.

Another interesting point was raised by a German/Canadian healthcare economist on the panel, responding to the complaint that most insurers will not pay for “experimental” treatments. Rather than leave patients out in the cold if they can't pay for life-saving, but non-standard procedures, the economist suggested this is the role of government, in the interests of furthering medical science. Not a bad idea. What do you all think?

I'll leave you with a joke:

In a recent edition of “The New Yorker,” a cartoon shows a gentleman shopping for a greeting card. In between the section on “Congratulations!” and “Get Well” is the following: “Good Luck With The American Healthcare System.”

To return to my original point today, when a societal problem becomes part of the pop culture–whether through cartoons in a national magazine or exposure from a TV mega-star–you know the public is fed up and ready for a solution. The question with healthcare is what that solution will be.