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Perspective: Congress works to keep medical costs rising

Perspective: Congress works to keep medical costs rising

Picture of Steven Weissman
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Congress functions as a harmonious well-oiled machine to inflate medical prices. Every politician in the House and Senate is silent as to the actual cause of gigantic insurance premiums, which is rising prices of medical services.

Insurance is just a means to pay medical bills. The problem is there are no legitimate prices.

Ask any hospital, lab or physician the price of anything and all you ever get back is a question: “What insurance do you have?” A simple blood test for cholesterol can range from $10 to $400 or more at the same lab. Hospitalization for chest pain can result in a bill from the same hospital for the same services ranging anywhere from $3,000 to $25,000 or more. Your price depends on how much can be extracted from you on an individual basis, often at your most vulnerable. If you are out-of-network or uninsured you pay the highest prices.

Insurance premiums are determined by the underlying medical costs. A provision of the Affordable Care Act requires health insurers to spend roughly 80 percent of premiums on medical costs. A report by the Department of Health & Human Services (at p. 295) found that the “net cost” of all private and governmental health insurance combined (after payment of medical bills), is a measly 6.4 percent of total U.S. healthcare costs.

Congress turns a blind eye to the pricing of medical services despite the fact that the official U.S. projection confirms national health costs will continue to be driven by the skyrocketing pricing of medical services:

Throughout the 2016-25 projection period, growth in national health expenditures is driven by projected faster growth in medical prices.

The idea that health insurance premiums are the problem is propaganda by the industry which spends more on lobbying than the defense, aerospace and oil and gas industries combined. The healthcare industry has been uniquely authorized to price gouge consumers through the elimination of legitimate pricing for medical services and price competition.

With no pricing mechanism for health services and no consumer protection, the GOP and Dems jointly fostered the most pernicious case of crony capitalism imaginable.

The one untouchable topic, the pricing of medical services, is the entire ball game. The reason Medicare for all appears to be a cost effective option is because Medicare pays less for medical services. For example, Medicare rates on average are at least 33 percent lower for hospital care than private insurance rates. Under any system, payment of outrageous, non-competitive medical bills will yield outrageous premiums and total costs.

Congress should compel medical providers to play by the same rules that apply to all other sellers of consumer goods and services. They should remain free to set their own prices. However, providers must be prohibited from billing each patient a different price for the same service. No politician on either side of the aisle can oppose this proposition.

Legitimate pricing of health services will empower patients to shop. Consumers will be able to Google the cost of any medical service and see real prices. The existence of price competition would force providers to operate efficiently and provide better service at lower cost, just like all other sellers of consumer goods and services.

Partisan bickering over insurance coverage requirements and the size and structure of subsidies is pure political theatre and misdirection. It’s designed to prevent the electorate from focusing on the pricing of actual medical services and it’s working like a charm.

Publicly traded shares of big pharma, the hospital titans and labs make new highs almost every day. These merchants and their lobbyists have wired a well-oiled machine to eliminate price competition and keep their revenues rising. Grotesquely defying logic, not a single national political figure has talked about killing the real monster, which is predatory pricing of medical services.

Both sides of the aisle agree on just one thing: jawbone about skyrocketing insurance premiums, but never, ever, under any circumstances mention the pricing of medical services. The name of the political game is protect medical industry revenue, regardless of the toll on our nation.


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I agree, the pricing is one of the biggest problems. The 20% rule is as well, that insurance companies must pay out 80% of revenue in patient expenses, thus leaving 20% for overhead and profits. 20% of $1000 > 20% of $100, hence the insurnace company who you would think would want a lower price, instead are happy to negotiate a higher price and then raise premiums. Tort reform. More skin in the game. Choice in what's covered. Sell across state lines, more competition is the answer.

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There is no prices currently for any services in a hospital. I worked in a major hospital here in Boise Idaho and saw for myself the billing of services. I also noted that hospitals should not be operated as non-profit which is a big joke to the rest of us taxpayers. Even level pay for their utilities is offered at a phenomenally low rate. I see why the government is so so slow to catch on to the bigger issues when they cannot even agree on any issue. I sent my congressman and senator and the other senators working on the Trumpcare the option to give us the American people the same kind of health insurance they have with the same "subsidies" to pay for it. They also had the option to opt out of any Obamacare. Another problem with getting anyone with experience in this field into politics since these "age old" career criminals who belong to the 4th branch of government will not let in young people who are familiar with the world they live in and not living in a government bubble behind their own walls in their estates. We have to have TERM LIMITS for congress for anything to change.

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And speaking of lobbying, we need to get the meat, dairy, egg, sugar and corn lobbies out of bed with politicians. Americans' unhealthy lifestyles and morbidity cost all of us huge sums of money. No one seems to address the need for individuals to improve their lifestyles to foster better health but also the deleterious effects of corporations and the federal government reinforcing bad dietary choices. For example, I heard on NPR recently that in the 1970s, people ate around 15 lbs of cheese/year. Now, the average is 35 lbs of cheese per year! Another way for the dairy industry to make money by promoting cheese - and how convenient that cheese contains casomorphines which make it inherently addictive. I'm pessimistic, though, that these powerful lobbies can ever be extricated from our federal government. Americans need to get healthier!

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you said "price completion" where you meant "price competition". Also, you should explain why the health industry is "uniquely authorized" to price gouge via discounts for insurance networks. What prevents other industries from doing the same?

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Good catch. What prevents other industries? Here are some examples: When it comes to credit cards and mortgages there are many regulations defining how everyone in the industry must calculate and disclose APR. In many States not only are groceries required to state the price of each item but also unit prices, meaning price per ounce to make it easy to shop and compare. Most if not all states require gas stations to post prices and specify the size type and also require disclosure whether it is a cash or credit price. In Florida, and other States, car mechanics must give a price estimate before doing any work. The States generally maintain programs to handle consumer complaints on almost any purchase. When it comes to health services none of the normal rules applies. No price disclosure, no published prices, no actual prices and no consumer protection - you are on your own. Hence the conclusion the health industry is "uniquely authorized" to price gouge. "Discounts for insurance networks" is just a rationalization by industry apologists. Considering 85% of the public has some coverage, network pricing is the real price - not a discount.

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Steven Weissman's article suggests, rather strongly, that insurance premiums are not the real problem, or not
even part of the problem. In fact, they are. With "ObamaCare"'s loaded gun pointed at our heads, forcing us
to buy from the biggest and most unnecessary elements of the "Medicine Show", insurance corporations no
longer have to worry about consumers saying "no" to their sweet little racket; no such regulations exist for the
companies themselves. Weissman points out that "ObamaCare" stipulates that insurance companies use at
least 80% of premiums for "medical costs", but in mid-2010 they proudly crowed about their work-around
for that apparent regulation: they'll just start calling any administrative costs above the nominal limit "medical
costs" - the same box of paper clips is no longer a mere office supply but a critical part of treatment - and
jam up premiums based on fraudulently inflated accounting of "medical costs". This is one aspect of their
endless snivel that they're not really the ones to blame, it's those greedy doctors and hospitals. Facts show
that greedy administrators at hospitals and GMO's are part of the problem, the largest part in uneven
pricing for the same services. But insurance companies are not blameless; they also indulge in greed and
the hostage-taking aspect of medicine in the U.S. As a parting shot at any misconceptions of "ObamaCare"'s
regulation of insurance company practices, they also bragged in 2010 that, although the law forces them to
provide "coverage" (not to confused with actual care) to people with pre-existing conditions, it does not force
them to pay for any new treatments for those conditions. If your problem is a broken leg, this is not a concern;
but for people with diabetes, multiple sclerosis, muscular dystrophy, neurofibromatosis, AIDS, lupus, or any
of a vast number of incurable chronic conditions, it makes skyrocketing out-of-pocket costs AND skyrocketing
premiums inevitable, as well as bankruptcy, and potentially homelessness. Single-payer national health care
doesn't just "appear" to be a solution, it's the ONLY solution to this problem. Under such a system, both
medical providers and insurers are heavily regulated, as in all European systems, whether the fully socialized English National Health Service ("Beveridge system") or the continental ("Bismarck") system with private
insurers involved but whose practices are strictly constrained, i.e. by law they must be non-profit. These
nations pay out comparative fractions for truly guaranteed health care, while receiving equal or better
treatment than in the U.S. Face it: as ideologically repugnant as it seems to some, a tax-funded public
healthcare system is the future. How long that inevitability can be stalled, at what cost to patients and their
families, is the only arguable point.

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Thank you Dr. Weissman. Finally, someone has hit the nail on the head. Please continue to hammer on "price completion" until it becomes the watchword for reform in Washington, with both political parties finding common ground.

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Neithè party republicans or dems seem interested in providing decent health care bill. Give health care back to people!

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Everyone wants to cut the prices of medical services, yet no one looks at why each company gets a different price. It seems that each company will negotiate what they WILL pay, as opposed to what it actually costs to deliver a given service. As much as I like Medicare, it is even worse, as it tells the doctors what their service is worth, then pays ONLY 80% of that number, regardless of what it actually costs to deliver the service. What I see happening here is something that is banned under current law, and that is balance billing. That lets the doctors take whatever Medicare or any other insurance will pay, then bill the customer for the balance of what they feel they should have been paid. That, my friends, is a sure way to send a LOT of Americans into bankruptcy.

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"As much as I like Medicare, it is even worse, as it tells the doctors what their service is worth, then pays ONLY 80% of that number, regardless of what it actually costs to deliver the service."

STOP lying. Medicare pricing is carefully studied and crafted with industry input and determines cost + overhead + a reasonable profit. If Medicare pricing were below cost, no one would accept Medicare and lose money hand over fist. But you know what, almost every hospital and most doctors accept Medicare.

"What I see happening here is something that is banned under current law, and that is balance billing. That lets the doctors take whatever Medicare or any other insurance will pay, then bill the customer for the balance of what they feel they should have been paid."

Balance billing is technically illegal everywhere, but it's done all the time because no one enforces laws against this Extralegal Racket. This racket completely ignores the concept of contract law, including the concept of mutual assent.

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I would like to posit that a related contributor to the high costs is the "right" everyone claims to have to the latest, most expensive treatments, drugs, surgical procedures and devices. This presumes all people should have access to or own the best this world has to offer at all times. Individual healthcare and public health are not the same.

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This may be why the GOP is so hot to get rid of Medicare. It's the only agency that oversees and negotiates fees. Even they can't seem to regulate the costs that hospitals charge for medications.

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So hot to get rid of Medicare? They've held Congress for 18 of the last 22 years, yet they've faithfully funded it the entire time and given it about 9% more funding each and every year. Can you show any evidence of them attempting to defund or repeal Medicare, or is this just a partisan lie?

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Lack of transparent medical service pricing is at the root of our Healthcare system problems. Addressing premiums alone will never allow the people to have a truly efficient free-market healthcare system.

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Steven Weissman--Again, putting blame into 1 box--the insurance companies!! There needs to be a big AND to you article that should add Big Pharmaceutical companies in the mix. That is where it starts. Ridiculous inflated cost for medicines. Why is congress not talking about this and putting in measures to regulate this exorbitant and growing costs??? We know why!! Congress is getting huge payoffs from lobbyist and they don't want to bite the hand that feeds them. So, Mr. Weissman, if you are really concerned about the cost of health care and want to educate citizens about this, then do a "real" job that is about the truth and talk about the full spectrum of what the real problems are and how they need to be fixed!!!!!!

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You have all made good points but what this comes down to is pure greed verses human life. I have nothing against someone being rich. Many individuals work very hard to accomplish this and rightly so. But with wealth comes responsibility and morals. Some have this and some don't. Those that don't creat a society that disregards human life. We live in a throw away society which sadly includes ourselves.


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