The economic experiment in market medicine has failed because when it comes to hospital care it’s usually a need, not a want
There are many factors that have been driving medical costs to unsustainable levels. Although we can rightfully blame insurance companies, malpractice lawyers and drug companies for driving up health care costs, it’s important to recognize that almost half of the health care dollars spent in Montana go to the hospital system. Eighty-five percent of those hospital dollars go to one of 11 hospitals and most of these major hospitals claim “nonprofit” status.
Hospital prices have not always been unreasonable. Prior to 1972, we had price controls on health care costs. The Nixon administration removed those price controls and thus began an experiment of converting what is a “need” – medical care – into a commodity to be bought and sold.
We have been using the market model for decades and there is still no wide array of hospitals to choose from, there is no price transparency, and there is no competition when it comes to hospital care. Let’s face it. The economic experiment in market medicine has failed because when it comes to hospital care it’s usually a need, not a want.
After 1972, hospitals began to employ what’s called the “charge master” system. Basically, hospitals will overcharge those with insurance and claim that they are shifting cost from those who can’t pay. That’s not a free market system. That’s something else. Simply stated, hospitals have had the power of a monopoly since 1972, and prices at hospitals have been increasing at an unreasonable rate ever since. If we don’t address this issue of hospital costs we will never fix the health care problem.
Let’s consider what’s happening these days. Republicans in Congress have promised to “repeal and replace” Obamacare. I’m not opposed to improving the ACA because it has an inherent flaw. Simply put, more people can get access to care, but hospitals and drug companies can still charge us unreasonable rates. We have to reduce the price of health care. Period.
Unfortunately, the Republicans in Congress are approaching the health care issue as a problem of spending. Their latest proposal would kick people off of Medicaid and remove subsidies for lower income working families who purchase private insurance. This approach will not lower hospital or drug costs and in fact it may make things worse. Why should we return to a situation where we’ve been before? It didn’t work!
Another facet of the Republican health care being pushed through the Senate would allow states to scale back conditions that insurers must cover. This would be terrific for insurance companies but terrible policy for those folks who have health care issues … in other words, the rest of us. This plan will be disastrous for millions of Americans and it will fail to address the issue. The fundamental problem with medical care is that it costs too darn much. Period.
There are proposals that would address high prices. One solution would be to allow any American to use Medicare. The rates charged Medicare patients are much lower than those charged to private insurers. Administrative costs are also much lower. Private insurance companies could still offer plans to those who wish to opt out of Medicare. This system, private insurance with a public option, is a method used by many developed countries to deliver health care. If our leadership could put ideas before ideology we could this too.
Let’s be clear. The current charge master system is damaging our economy. Wages are flat in large part because employers have had to pay more for health benefits. Our businesses now compete on the world market with companies that don’t have extortionate health care costs affecting their bottom lines. This imposes a huge burden on our economy and needs to be dealt with
Republicans in Congress have an opportunity to get things done for you. Hold them accountable.
Tom Woods, D-Bozeman, is chairman of the House Democrats.