You should be outraged at this story because it proves in very concrete terms just how screwed up healthcare is in this country and what the government's role in this mess already is.
My mother was in and out of the hospital for a very long time with a devastating infection - the worst case of MRSA that her infectious disease specialist had ever seen. During her last hospital stay she was in the hospital for 48 days and ran up a $110,000 hospital bill. I've included a copy of the important part of the hospital bill below.
Now look carefully at what happened in the payment of the bill. She was covered by Medicare for all but 9 days of her stay so guess how much they paid? A little over $2300. The decimal point is in the right place.
So what happened to the rest of the bill? Medicare forced the hospital to write off over $75,000 of charges. I called the hospital's billing department to confirm my understanding. Yes, Medicare only paid $2300 because that's all they allow for treatment of Sepsis, the official diagnosis. Huh? 39 days in the hospital and $67,000 worth of pharmaceuticals (they had to use the really super duper antibiotics on her) and they only allow $2300 in charges?
So then I asked the billing person if Medicare was forcing hospitals to provide service below their cost. And I asked the question twice to clarify that I was talking about costs as opposed to charges. And the billing person explained unequivocally that this was standard practice with Medicare and it was getting worse all the time.
Now, as you can see from the bill, our secondary insurance paid out an additional $22,000 (it's called MGD Care for reasons that escape me) and we had to pick up the balance ourselves but there is no way the hospital covered their costs on my mother and this whole mess begs a few questions.
How do hospitals break even or make a profit under these conditions?
Simple. They have to shift the costs to private insurers and patients, raising their prices so that on average they come out even. This is not something you hear much about but you can Google Medicare cost shifting and find a few articles on this subject. They tend to be fairly hypothetical but there's nothing hypothetical about our experience.
So this explains why healthcare costs (not total spending but the price of specific services) are so high. If you are under 65 you and your insurance company do not get the Medicare discount. The government is forcing the private sector to subsidize socialized medicine through the back door. Get outraged.
Suppose you don't have Medicare or insurance?
You're screwed. Good luck trying to get the Medicare discount. You might be able to get some discount from the hospital but nothing like Medicare gets. My mother would have been liable for $110,000. Of course, if I'm ever in this predicament I'm going to demand the Medicare discount just to see what kind of reaction I get.
So how would The Patient Protection and Affordable Care Act impact this situation?
Well, as I was listening to these politicians talk during all the discussions leading up to the vote (and they are quite clever with their language) I kept coming back to the conclusion that the entire Act is a massive shell game of shifting costs around. I came to that conclusion because, despite claiming that they were going to reduce health care costs, they never actually provided any specifics as to where the savings were going to come from. Oh...they talked quite a bit about how they were going to negotiate better deals and reduce Medicare payments but that doesn't actually reduce costs, just like forcing the hospital to eat $75,000 didn't reduce the hospital's cost of taking care of my mother. So the Act is going to just reduce payments and drive profits down and losses up for all the providers - i.e. things will get worse.
Why don't we hear more about Medicare cost shifting?
Good question. I have no idea.