When President Clinton took office in 1993, total healthcare costs were 12.5% of GDP; by 2001, when Bush took office it was 14%; Obama came in at 17.3%; and, Trump at 18%. (See NHE Tables.) The current official projection is that medical pricing will continue to drive increases in total costs which will rise to 20% of GDP within 10 years.
Nowhere in the 41 page Congressional Budget Office Cost Estimate of the AHCA released today is there any mention of the effect of “reform” on total health costs, which will continue to rise. This omission is no accident. It is part of deliberate concealment.
A corrupt industry enabled by subservient politicians is bleeding the nation dry. In actuality, politicians on both sides of the aisle shovel more money into every strata of the industry, including hospitals, labs, pharma, physicians and insurers.
The CBO report considers the effect of reform on the US budget deficit, the cost of private health insurance and the number of insured individuals – but not the total cost of healthcare. If your premium goes down, the industry will nonetheless be paid more when you add in tax credits and subsidies paid by the government plus higher amounts paid out of pocket by individuals. It is the overall cost that has put the middle class into a depression and wrecked U.S. competitiveness.
93.6% of total U.S. healthcare costs consist of bills for services such as hospitals, labs, physicians and drugs. What makes up the other 6.4% of total U.S. health costs? Incredibly, 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, is a measly 6.4% of total U.S. healthcare costs. (In calculating “net” insurance cost, HHS subtracted medical expenses from premiums to avoid counting the medical expenses twice).
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. It has been uniquely and effectively authorized to price gouge consumers through the elimination of legitimate pricing and price competition.
The actual problem with our system is that medical pricing is all smoke and mirrors and totally dishonest. Nobody knows how prices are determined.
Ask the price of any medical service and you always receive the same answer: “What insurance do you have?” Billing is determined by how much can be extracted from each patient on a case by case basis, often taking advantage of people at their most vulnerable. Your price may be 50X more than your neighbor’s at the same facility for the exact same service.
This is much worse than a mere lack of price transparency. There are no actual prices at all. Industry apologists have the audacity to claim that everyone is “charged” the same amount, it’s just that we each receive a different “discount.” It is a recipe for draining the wealth of the middle class – and it has largely succeeded.
The solution is legitimate pricing of medical services: Congress must compel medical providers to play by the same rules that apply to all other sellers of consumer products 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 – thereby preventing consumers from being able to shop pricing.
We should be able to Google the price of any medical service and shop for fair value.
Tax credits or subsidies for premiums to enable payment of outrageous medical bills is a government purchasing scandal; but this one traps every consumer personally.
For at least the past 24 years, politicians have diverted discussion from the pricing of medical services (93.6% of total costs) to funding insurance premiums (6.4% of total costs). Today’s CBO Report which fails to discuss total U.S. health costs actually reflects the absence of political will for real reform – it’s more like rearranging chairs on the deck of the Titanic.