Category Archives: Health Economics

It’s not enough that we allow drug companies to take advantage of their patent protection and overcharge, but we also have to deal with ye olde American revenue generating scams.  Unfortunately it seems to be in the American character to take advantage of non-regulation.  So drug companies without the restraint of negotiating prices with Medicare up the prices yearly without good reason, save their desire to maximize prices.  We, the U.S. pay more for drugs than any other country in the world.  Perfectly legal but very costly.

Similarly without regulation and oversight scams in Medicare occur.….

The wheelchair scam was designed to exploit blind spots in Medicare, which often pays insurance claims without checking them first. Criminals disguised themselves as medical-supply companies. They ginned up bogus bills, saying they’d provided expensive wheelchairs to Medicare patients — who, in reality, didn’t need wheelchairs at all. Then the scammers asked Medicare to pay them back, so they could pocket the huge markup that the government paid on each chair.

A lot of the time, Medicare was fooled. The government paid.

Since 1999, Medicare has spent $8.2 billion to procure power wheelchairs and “scooters” for 2.7 million people. Today, the government cannot even guess at how much of that money was paid out to scammers.

Read the article for full details.

Medicynical Note:  Who is to blame?  The scammers? or the regulators (and lack thereof) or perish the thought the patients ?  All to some degree.

We have a political party dedicated to decreasing regulation, still think that’s a good idea?  Perhaps the solution is to become libertarians and do away with  government intervention, including Medicare, Medicaid and all government medical programs including licensing, drug testing and development, patents, etc and let everyone compete.  A few people may die, collateral damage to our quest for deregulation, because they can’t afford care but perhaps the change will encourage honesty and truth through the “music” of the marketplace?  Or do we have a problem that money makes people do funny (not ha ha) things?

Read this and weep.  We pay more for almost everything; have no better outcomes; have tens of millions without coverage; lead the world in medical related bankruptcy. 

Medicynical Note:  This is not rocket science.  The numbers tell the tale.  We pay more because our congress under the influence of the drug, hospital and health insurance lobbies has passed laws that allow and in some ways encourage the overcharging. 

And we’re stupid enough to pay.   And the republicans think this is the best system in the world.  The question is for whom?

Victor Fuchs tells us how to save a trillion on health care……by doing what other countries have done.

Americans spend more than 17 percent of GDP on health care; other high income industrial democracies spend only about 11 percent. The 6 percent difference in our $17 trillion economy amounts to $1 trillion..

The excess in the United States is primarily attributable to a more expensive mix of procedures and services, higher prices paid to drug companies and physicians, and inefficiencies in the financing of health care. There are undoubtedly cultural differences between the United States and other countries, but it is also true that Swedes differ from Italians, Germans from French, and the English from all of the above.

Read the article.

Medicynical Note:  Essentially we need to change from a revenue generating system to a health care system.  It’s that easy. 

In the U.S. at every level the emphasis is on increasing revenue rather than improving health care, even with the advent of health reform.  We overuse, over prescribe and over charge without any brake on expenditures.  To gain control and assure access and quality we have to figure out the riddle—most other countries have figured it out.  I’m not optimistic we that we can do it because of our religious-like dogged devotion to failed approaches. 

American health care is the best  i.e. the most expensive in the world:  See this to get an idea of the problem:

According to his bill, the hospital charged $81,000 for a four-vial dose of the medication.

Shocked at the price tag, Ferguson told the Charlotte Observer he and his wife found the same vials online for retail prices as low as $750.

Medicynical Note:  Health care value is an oxymoron in the U.S.  To these “providers” it’s the money that counts.

Quality, cost efficiency, access, good outcomes are not their primary issues. 

Hospital systems just can’t resist the temptation to maximize revenue and profits.    Another example of this was cited in the NY Times “Hospital Chain said to Scheme to Inflate Bills”

In the the article:

Physicians hitting the target to admit at least half of the patients over 65 years old who entered the emergency department were color-coded green. The names of doctors who were close were yellow. Failing physicians were red.

The scorecards, according to one whistle-blower lawsuit, were just one of the many ways that Health Management Associates, a for-profit hospital chain based in Naples, Fla., kept tabs on an internal strategy that regulators and others say was intended to increase admissions, regardless of whether a patient needed hospital care, and pressure the doctors who worked at the hospital.

Read the article for the details.

Medicynical Note:  This is not much different than the common practice of having multiple levels of fees for services provided.  For insurers there are discounts sometimes exceeding 50% while individuals without insurance are charged the full rate.  

Going to the hospital is increasingly like going to a used car dealer (no offense intended).  Prices aren’t what they seem; you need to bargain hard for the best deal and yes scamming the customer and system seems to be a problem. 

Oh yes, did I mention health care value, quality and access……….not really a prime concern.

Published in The Systhesis Project published by Robert Wood Johnson Foundation:

Hospital consolidation generally results in higher prices. This is true across geographic markets and different data sources. When hospitals merge in already concentrated markets, the price increase can be dramatic, often exceeding 20 percent.

Hospital competition improves quality of care. This is true under both administered price systems, such as Medicare and the English National Health Service, and market determined pricing such as the private health insurance market. The evidence is more mixed from studies of market determined systems, however.

Physician-hospital consolidation has not led to either improved quality or reduced costs. Studies find that consolidation was primarily for the purpose of enhanced bargaining power with payers, and hence did not lead to true integration. Consolidation without integration does not lead to enhanced performance.

Medicynical Note:  So consolidation costs more and doesn’t improve  care.  It also decreases choice, for example as when a religious based “Health”system dominates an area.  Not good.