Why Health-Care Costs Are So Out of Control

Imagine you're 64 years old, and you get severe chest pains at home. Chances are you might just call for an ambulance. That's what Janice of Connecticut did. She was taken the four miles to an emergency room at Stamford Hospital, which is officially a non-profit institution.

After three hours of tests and a visit with a doctor, she was told she didn't have a heart attack, just indigestion. That's the good news. The bad news is that she was charged $21,000 for the false alarm. That's $995 for the ambulance ride, $3,000 for doctors and $17,000 for the hospital.

That's one of Steven Brill's many anecdotes illuminating a story on the rat's nest that is health care services pricing and billing. We spend twice as much as most nations- 20% of our GDP on health care. The story appears this week in Time magazine.

To put it in another way, we spend more on health care than the next 10 big spenders combined: Japan, Germany, France, China, the U.K., Italy, Canada, Brazil, Spain and Australia. U.S. health care spending will probably total $2.8 trillion this year alone.

Thought we spent a lot of money cleaning up New York, New Jersey and Connecticut after Hurricane Sandy?  Well, we spent almost that much last week on health care.

Why are costs so out of control? Brill surmises that the system is run by the sellers of services, not the consumers. Put any five people in an emergency room for treatment for the exact same condition, and most likely, you'll get five totally different bills, depending on their insurance coverage.

As he points out, the medical establishment is becoming very wealthy under this system. CEOs of non-profit hospitals are pulling down six figure salaries, and the government predicts that 10 of the 20 fastest growing occupations are in health care. The industry outspends the aerospace and oil and gas sectors on lobbying.

Come to think of it - the health care complex has replaced the military industrial complex as the business with the most political muscle.

If consumers of health care actually able to shop around for service, maybe they could make a difference. But, that rarely happens. Let’s face it, when you're on a gurney you don't necessarily ask for a price estimate, but maybe we should.

Prescription drug prices in this country are 50% higher than other countries.

Market discipline needs to be introduced into the system. Currently, Medicare doesn't even negotiate prices on drugs. If two drugs have the same effects and one is five times the price, shouldn't the government choose the cheaper one?

I understand the need for Medicare patients to get help paying bills, but why can get a Medicare patient get a free ride or nearly free ride for catastrophic care, when those without any insurance face bills that are unpayable. Why is cancer a million dollar treatment event for anyone but a Medicare enrollee?

Unfortunately, Obama did nothing to solve these problems because it focused on who pays for care rather than how in the heck can we stop the increase in health care prices?

That is the problem that needs to be solved.