Topic: Health Care
The Kent Snyder $400,000 Reality Check Long-time Ron Paul confidant Kent Snyder died recently at the age of 49. He had no medical insurance and left his family with a bill of $400,000.by Bob Nightingale
(Libertarian)
Monday, July 14, 2008
It's sad when anyone loses a loved one. Unless you've gone through it yourself, it's hard to explain it to some one else. What's sadder still is dealing with the medical bills, after the patient dies.
Over a period of nine years, my mother had four life-saving operations before succumbing to cancer in 1990. My father died in 1995 after seven years of treatment. Thankfully he had insurance where he worked and supplemental insurance through the Navy, because he was a veteran. He was also able to get medical "gap" insurance once he found his condition to be terminal. When he died, he still owned his house and had cash in the bank. But while my mother was sick, my father turned down a job offer in another town because of my mother's pre-existing condition.
My grandmother wasn't so lucky. In order for her to qualify for state medical treatment, the family had to declare her indigent.
A month ago I lost my job and recently started a new one. If I wanted to maintain my health benefits with COBRA, it would cost me about $970 per month. My wife has insurance at her office, but it would cost $700 a month. Luckily I was able to find another job with comparable pay and benefits in this soft economy. I wasn't so lucky back in 1993. Back then I lost my house because I couldn't make the mortgage payment. At the time the CORBRA was $430 and I had a new-born. Let's see: keep my house or take care of my baby? You do the math.
As a regular contributor to the Nolan Chart, I've followed the Ron Paul campaign closely for nearly a year here. I've agreed with Congressman Paul on many issues, but could not quite understand how medical savings accounts and tax breaks are going to help those who are in need of very expensive medical treatment. Tax breaks and savings accounts will not help anyone who cannot afford to fund their retirement, save for college or owe a balance on their credit cards. No one chooses to be sick.
Many states require hospitals to treat everyone who comes into the emergency room, regardless of ability to pay. If a hospital wants to stay in business, it has to move those costs to those who can pay, by increasing fees or limiting services.
Whenever I've taken myself or my family to get medical treatment, I fill out two sections on a form: a.) "Do you consent to treatment?" and b.) "Do you agree to be financially responsible for any costs not covered by your insurance?" Or what, you're not going to do the treatment? I sign the paper every time and worry about how I'll pay for it later. It's not like they're going to repossess my aspirin. They're just going to charge me $15 per pill.
I think we are going to see socialized medicine in this country, because people want it. No one wants to get sick. Not everyone can pay to get well. The doctors, nurses and hospitals ought to be paid for their services. Otherwise, they will have to make their fortunes selling crap on e-bay, instead of practicing medicine.
The whole healthcare debate boils down to a simple question: who pays for it?
I don't know why Mr. Snyder didn't have medical insurance. It really doesn't matter now. His family signed that form. They've raised about $28,000 of the $400,000 that was owed. If you want to make a contribution, go to www.kentsnyder.com for more details.
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I have a medical savings account (MSA), and fortunately, I have very good health insurance, so I end up paying nothing out of pocket for medical expenses. But your article points out the problem that a 2,500 or 5,000 savings account isnt going to last long when catastrophe hits.
Most of the think tanks that developed the MSA idea also PAIRED that idea with (1) the ability to roll over unused funds, to promote responsible use of the MSA, and (2) the purchase of group catastrophic health care insurance, which is usually half the cost of 'full service' insurance. The idea is that insurance premiums would be lower, and the MSA would handle the regular doctor and prescription drug expenses.
Of course, if the government would get OUT of health care, and allow pools of people to band together (such as all the uninsured in a town) for the PURPOSE of purchasing a group catastrophic insurance policy, and if the GOVT would PERMIT everybody to have an MSA, we could see this in action. Instead, we have 1/4 of a good idea, which of course is not working. Its like asking a marathon runner to wear long jeans, one running shoe, and one dress shoe and then blaming the running shoe for his less-than-sterling performance.....
I understand that most people want socialized medicine because they do not understand what got us, the nation into this problem from the beginning. The 3rd party payer system took off because it was initially a way an employer could give the employee additional compensation for his/her work and not have the employee taxed for it. We all know the problems as well as the benefits of 3rd party payer system.
If the government was not involved in the health care system to begin with, $5K would go along way. That $400K bill would be considerably less. Also much of the problem comes down to the American people, Many like to give their money for political causes such as the political war between the non-heterosexual community and the christian theocratic community. Just think how much better we as a nation would be if the money from both of those communities were not used to fund political battles but to donate to help keep community hospitals running so that those patience that pay their bills themselves are not paying $15 per aspirin but $0.50.
So until all Americans believe that individual liberty is paramount and ones own happiness is not contingent upon another doing ones will, we as a nation will benefit. Unfortunately I don't see that happening because many Americans are not happy unless they are controlling others. So hello socialized medicine. Good bye quality care.
If an operation cost $800 instead of $80,000 it would be no problem. If there was a free market in medicine the cost would drop by 90%. Think of a Costco medical center having specials on 'knees' in August! The market would drive the costs down. Its as simple as that. The should be no connection between government and the economy. Read Atlas Shrugged.
Look at LASIK. Is LASIK elective? Technically - but only because it's not covered by insurance. (At this point it saves you money in the long run.) But what happens to the price of the proceedure - it goes DOWN as time goes on, not up - despite not being covered. Simply because there is competition.
Then look at car insurance. I have to go shop for it, and I have choices. Competition. Some are more expensive than others. I use a more expensive option, USAA, because I know my @$$ is covered, period. There are cheaper options out there and varying reputations. Can you say the same about medical insurance?
My health insurance is through a PPO from work. The PPO-approved doctors in the area around my house are ignorant jackasses. I therefore never see them. Does a situation that encourages me not to get yearly physicals tend to lower the cost of my insurance, or raise it?
I quit smoking and started exercizing three years ago for purely personal reasons. My work-approved health insurance never cared that I was a heavy-smoking cube slave before that, and to this day doesn't care that I am a reduced liability now. I'm part of a group, and I pay group rates. Is that lowering the cost of insurance, or raising it?
Finally, when not posting on the Nolan Chart, I occasionally have to figure out medical billing software problems. I can say with a great deal of certainty that if we weren't putting every single medical procedure through the insurance billing process, we'd be removing 50% of the cost of the transaction right there. It's so convoluted that there is now a billing industry - collection agencies which take insurance claims from small doctors and process them for them - and roll them over into collections if they don't go through. That's all they do - they get paid to file the claims and follow up on them.
I think you should read The Revolution if you haven't already. It's where he shows the way things were when he first started practicing medicine - when there was no HMO act and insurance was still insurance - and advocates that we go back to that.
Posted By: Walt Thiessen
Date: 2008-07-15 04:13:05
Bob makes a good point that some commenters are missing. that the cost of health care is so outrageous that even MSAs aren't enough. Beatnik, for instance, in reply says that Bob should read Ron Paul's, The Revolution, a Manifesto. While it's true that things were better for health care when Ron Paul first studied medicine, and the book does give a cursory description of how we got into the current mess, the book actually fails to explain how to get out of it.
Yes, MSAs combined with catastrophic policies (what used to be known as Major Medical) are a part of the ultimate answer, but they can only be part of it. Older Americans in particular find that even this approach is horribly expensive. If a solution is too expensive to implement, it won't work.
The missing link to solving the healh care crisis is actually three separate links: (1) ending government regulation of health care, particularly via the FDA and Medicare; (2) patent reform; and (3) Federal Reserve reform and (ultimately) elimination.
It's often difficult to appreciate and to convey just how damaging regulation is. The FDA's harm to medicine is a little easier to understand because one can point to the cost of getting a drug approved. It costs upwards of $1 billion per drug to gain approval, and that $1 billion has to come from somewhere. For the few drugs that successfully clear the FDA hurdles, it has to come from the drug consumer. The net result is designer drugs that cost thousands of dollars a year for people who are on them.
The Hidden Cost of Patents
But there's also another piece of the FDA puzzle that never gets examined. That's patents. The process of patenting drugs insures that drugs must remain expensive, because patents prevent competition from lowering the costs of production in any meaningful way. Eventually, the patent does run out, and the cost of production finally comes down, but in the meantime, the cost remains artificially high.
Patent defenders argue that without patents there wouldn't be any significant drug development because no one could afford to do the research, but that's not true if you don't have an FDA forcing pharmaceuticals to waste millions of dollars during development. Further, and even more importantly, by insisting that competitors come up with new patentable ideas before they can even enter the marketplace, you also insure that the products must be riskier. Thus, the whole FDA approval process becomes a vicious cycle that only drives the cost of production ever higher while making medications less safe in the long run.
Regulation: Driving Costs Forever Higher
Medicare does the same kind of thing, although the impact is different. With Medicare, the emphasis is on preventing private medicine from doing things and making judgments its own way. Everyone ends up being forced to buy services that most don't want to pay free market insurance rates for so that the "disadvantaged few" will be helped to get expensive services under their health insurance that insurers normally can't justify economically. By forcing everyone to accept this government-mandated form of "spreading the risk," all that really happens is that demand is forcibly increased. When demand increases for any reason, prices also increase.
As just one example, there has been more and more political pressure applied on insurance companies to include mental health care in insurance policies. The problem, of course, is that even simple therapy is expensive, particularly if taken over the course of years (as it so often is), and there is no way to limit the risk that people will need and want to use that portion of a health care policy. Unlike a dread disease like cancer or a heart condition, there's no way for insurance actuaries to mathematically limit the risk of exposure, since any number of people in the population could decide that they want mental health care at any particular time. Actuaries know that only a certain number of people will suffer from cancer, so they can mathematically spread the risk using a limited cost. But since there are no natural limits as to the number of people who might want mental health therapy, there are no similar measurements actuaries can reasonably make. Thus, when insurance policies are forced to include mental health coverage, that factor provides just one influence for driving the cost up. There are many other similar factors that are influenced by similar health coverage requirements established by the government.
Thus, Medicare and its accompanying regulations of medicine drive up the cost of health care for everyone because it artificially drives up demand in thousands of different ways via those thousands of different regulations.
The Role of the Inflation Tax in Health Care
But even with all this, there is yet another major player that gets very little attention. That player is the Federal Reserve System. Health care is one of the fields that gets the "benefit" of all the easy credit that gets created by the Fed through its stimuluses, effectively creating money out of thin air. This artificial insertion of extra money into health care inevitably leads to price inflation which enriches those companies who have the biggest fingers in the medical pie while making the cost of those services rise for all of us.
Thus, health care is hit by a triple whammy: (1) tens of thousands of expensive regulations, (2) patent abuse preventing competitive refinement of existing drugs, and (3) Federal Reserve manipulation of the money supply.
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