Serving Northern St. Louis County, Minnesota

Man and dog highlight the flaws in American health care

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Want affordable health care here in America? Apparently, you’d best grow some fur and start walking on four legs.

That’s the upshot of the experience of a friend in Tower and his dog Aksel, who recently both ended up with giardia, that nasty intestinal parasite that folks and dogs in our area contract most frequently by drinking from lakes or streams where beavers are present.

If you haven’t had it, rest assured you don’t want it—unless explosive, watery diarrhea is your idea of a good time.

The real story here, of course, is the vastly different cost of care for both my friend and his dog, and what it says about the fundamental flaw at the heart of the American health care system. Aksel’s giardia test from the Ely Vet Clinic ran about $80, according to my friend. He recently received the bill for his own giardia test, and it was a bit more than $80— in fact, it was $4,720 more than the same test the vet administered to his dog. That’s right. It was $4,800 for the test.

Now, there’s a couple of things in that to unpack, but the most concerning is the absolute disconnect between the actual cost of conducting a test and the price that is ultimately charged. Giardia is a parasite which is detectable through a stool sample. If the local vet can have that test done, charge the pet owner $80 and, presumably, make a little profit on the transaction, it is confirmation that the actual cost for a lab to confirm giardia from a stool sample is well under $80.

So why do those who set the prices for our human health care system feel $4,800 is a reasonable charge?

This is one of the biggest issues in the American health care system: The prices charged by health care providers rarely have any relation to the actual cost of providing the service. And nobody knows the price of anything in the health care system until they get the eye-popping bill.

Imagine going to the grocery store and finding no prices listed for anything. You don’t have to pay at the store, so you go home with your items with no idea how much it’s going to cost you. You get the bill a month later only to find out that the pound of hamburger you brought home was priced at $1,200 a pound— and you’ve already eaten it!

You’d never go to that store again, of course, except for the fact that all of the other stores operate exactly the same way. That’s the reality of the American health care system today.

Some argue that more competition is the solution to bringing down costs, but I figure those folks missed a few things in their studies of market economics. Adam Smith’s invisible hand assumes a few things, including an informed buyer and the ability not-to-buy if the price is too high.

None of those factors apply to health care and they aren’t going to, no matter how much we pretend otherwise. If you’re in a car crash, you’re not going to get on the Internet to shop for the cheapest emergency room, and that information wouldn’t be there anyway, even if you were interested. If you’re facing cancer treatment, you’re not shopping for a sale on chemotherapy at the local discount center. You want in at the Mayo or some other top-notch medical center and you most likely aren’t going to care, or even ask, what it costs. And even if you did ask, the doctors would have no idea.

The bottom line here? The notion that market forces will control medical costs in the United States, or anywhere else, is pure fantasy. Market forces work great in many cases, yet they all but vanished when it comes to health care when we shifted to a system in which most Americans were covered by private insurance. Once we, as health care consumers, stopped paying the price for our own care, market forces no longer worked. No one cared what anything cost, as long as it was covered and someone else was picking up the tab. It didn’t take long for the money men in the health care industry to figure this out, and prices, profits, and salaries for those at the top soared as a result. And why not? If no one cared any longer what anything cost, the sky was literally the limit. As a result, we now pay nearly twice as much as the next most expensive country in the developed world for health care, for outcomes that, on average, are only marginally better than some Third World countries.

And the costs continue to spiral, stressing the vitality of American businesses which have to pay for rising premiums for employees. And they leave tens of thousands of Americans bankrupt if they actually get sick.

So why did little Aksel’s giardia test cost just $80, while his owner’s cost $4,800? Because almost no one buys health insurance for their pets, so pet owners pay the freight themselves. Market forces still function in veterinary care, and that’s kept prices in line. Which, incidentally, is why you absolutely should not buy those pet health insurance policies some in the veterinary industry are pitching these days.

So, where do we go from here? Anyone who argues that market forces can fix what ails our health care system is kidding themselves. That horse left the barn decades ago and is dead and gone. At this point, the only mechanism for getting prices for health care back in check is through adoption of a single-payer system, like Medicare. Here’s the reality— both Medicare and Medicaid set the prices they’ll pay, and those prices are set much closer to actual costs. On average, private insurers pay slightly over twice as much (1.7-2.6 times as much according to a recent CBO study) as Medicare, which amounts to many hundreds of billions of dollars in additional charges every year that bear no relationship to the actual cost of the care received. All that extra money just feeds the lucrative gravy train that the U.S. health care system has become for those at the top.

Adopting a single-payer system would dramatically cut the price of health services in the U.S., saving many hundreds of billions of dollars a year. And if Congress would allow these same programs to set pharmaceutical prices, we would save tens of billions of dollars more.

Of course, wringing all that money out of the health care industry would gore an awful lot of oxen, which is why this is one of the biggest fights for America’s future. There is now so much money to be made in the health care system that anyone who tries to rein it in is going to face an onslaught of negative attacks and intense political lobbying. In crafting the Affordable Care Act, President Obama opted to avoid this onslaught by propping up the failed private health insurance system at the root of the problem, rather than pushing for the only solution that can ultimately bring health care costs back in line with reality.

Hopefully, we’ll have bolder leadership on this issue soon. Either that, or we’ll have to start taking ourselves to the vet.

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