By Derek Melot/Bridge Magazine
Well, no surprise there. And no, I’m not saying doctors should work for free or for a pittance. The story behind the story on this is why there’s such a fee differential between the U.S. and the rest of the Western nations. This story is at the heart of almost every issue now being debated in public life:
People don’t shop for health care.
Those of you who have read my previous blog at my previous gig know this refrain, but bear with me as I elaborate on it again.
A consumer is supposed to be price-sensitive. We all may want to drive a Caddy coming off the Grand River Assembly’s line in downtown Lansing, but most of us can’t afford it, or choose to deploy our funds in other ways. If GM finds that its Cadillac prices are too high to sell enough of them to make money, theory says the firm will lower the price.
Is that what you do when you visit the doctor’s office? Do you walk up to the receptionist, discuss the office fee (or co-pay for the insured) and then decide it’s too high and drive down to the next doctor’s office? Nope. In our health-care system, there are few cost constraints because everyone just wants the service, either for themselves or a loved one.
Ever witnessed anyone standing in a hospital room telling a doctor that the surgery is too pricey and Grandma is just going to have to take her chances with other remedies?
Health-care costs (for employees and especially retirees) are running Michigan’s cities toward bankruptcy. Health-care costs (via Medicaid and benefits for employees) are chewing up the state budget. Private businesses in Michigan look at health inflation and wonder when they have to choose between coverage for employees or losing a competitive position vs. overseas entities. This is a Michigan issue, folks, with a capital M and capital I.
Pay particular attention to this line in the piece: “For U.S. primary care physicians, public insurance paid 27 percent more and private insurers 70 percent more for office visits. The fees charged for hip replacements by orthopedic physicians were even greater: 70 percent more for public insurance and 120 percent more for private.”
Wait, isn’t government supposed to be the spendthrift, throwing away money? Isn’t the private sector supposed to be squeezing every penny?
In fact, both the public and private insurers are trying to squeeze every penny — as much as their client base (voters/customers) will allow. When the public sector does it, people yell that the government is meddling in Medicare (a government program, in case anyone has forgotten); when private insurers do it, people yell that they are being abused and demand government tell the insurers they have to do certain things at certain prices and let the details fall where they may.
So, the next time you see your local government or the state cut a program, reduce services or the like, stop and ask yourself, “What am I doing, as a consumer and a voter, to be a diligent overseer of health costs?”