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Affordable Healthcare and Bankruptcies in the US

June 18, 2009
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How is it that every politician keeps talking about affording healthcare when we don’t know how much things cost?  It seems simple to say that everyone deserves healthcare, but how can we set up a budget for healthcare when there is no transparency or open source for determining how much health care expenditures really cost us.

Some health advocacy groups have pushed to have a database listing exact costs for medical procedures, devices, and even the Kleenex in hospitals, but guess who quashed that idea?  Hospitals.   Doctors, and anyone who makes money off of charging different rates in health care.

Health insurance amounts to a buying club, with reduced rates to members, except most economists say that even health insurance doesn’t prevent bankruptcies, because the premiums and deductibles are so high.  A report done at MIT states that even with health insurance, medical costs impact bankruptcy filings:

We argue that either subjective classifications of medical bankruptcies overstate the true bankruptcy risk from illness and injury or that there is a high bankruptcy risk from medical costs even among those with health insurance.

The authors of this particular report go on to state that since the classification for bankruptcy is subjective, they can’t be absolutely sure of these findings.   But other studies validate the idea that having health insurance does not protect against bankruptcy, and rising medical costs do impact foreclosures and bankruptcies:

For my own family, as I have mentioned with my nerve damage caused by a surgeon’s error, bankruptcy and foreclosure are possible, even brought to the dinner table every night, as a direct result of health care and related costs.  We had health insurance.  We had money saved up.  What we didn’t have was any way to hold the destructive health care model responsible.   So, then it appears that the financial systems will have to take up the slack.  But, even though the physicians made the mistakes, caused 3 days more of hospital expenses, plus thousands more to document the initial injuries, the offending physicians still billed for all their services.  Guess who had to pick up those bills?  Yep, health insurance companies, which are only just beginning to say they won’t pay for gross medical errors.

Here’s the real dilemma though:  no one really has a good grasp on what health care costs the average person.  There is no real set pricing guideline, and hospitals and doctors can all charge whatever amount they deem fit at the time, with no recourse from the consumer’s side.

Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.

Most of the medical bankruptcy filers were middle class; 56 percent owned a home and the same number had attended college. In many cases, illness forced breadwinners to take time off from work — losing income and job-based health insurance precisely when families needed it most.

Yes, to all of those for us, and now we have no  health insurance due to costs.  I now have a pre-existing condition due to the surgical injury, further increasing our health insurance rates.  So what do we get for these rates in health care?  Well, apparently we get more medical errors at higher prices.  In fact, the US topped the charts with highest medical costs and most medical errors:

Not only do Americans pay much more for medical treatment than anyone else in the world, they also bear the brunt of the most medical errors, according to a survey covering the USA, Australia, Canada, Germany, New Zealand and the United Kingdom. Almost 7,000 patients were consulted.

The survey supported by The Commonwealth Fund finds that one-third of U.S. patients with health problems reported experiencing medical mistakes, medication errors, or inaccurate or delayed lab results — the highest rate of any of the six nations surveyed…the United States stood out for high error rates, inefficient coordination of care, and high out-of-pocket costs resulting in forgone care.

Great, so we pay more and 1 in 3 Americans is the victim of a medical mistake.  The lead author of the Harvard study, Himmelstein describes the many problems that plague the costs of health care in the US:

Dr. David Himmelstein, the lead author of the study and an Associate Professor of Medicine at Harvard commented: “Unless you’re Bill Gates you’re just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who happened to get sick.”

Today’s health insurance policies — with high deductibles, co-pays, and many exclusions — offer little protection during a serious illness. Uncovered medical bills averaged $13,460 for those with private insurance at the start of their illness. People with cancer had average medical debts of $35,878.

“The paradox is that the costliest health system in the world performs so poorly. We waste one-third of every health care dollar on insurance bureaucracy and profits while two million people go bankrupt annually and we leave 45 million uninsured” said Dr. Quentin Young, national coordinator of Physicians for a National Health Program.

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