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Recently, Washington Post columnist Ezra Klein interviewed Kaiser Permanente CEO George Halvorson and talked about health care costs. Halvorson provided Ezra with a series of charts (PDF) that purported to show health care cost comparisons with several other countries.

But the costs are not accurate, at least in my real-world experience. Digging into the slide show Halvorson provided, we see that the costs for the other countries are provided by their government health systems while the US costs are from “independent data bases” and “online cost comparison sites”. My family has had the unfortunate experience of having several of the procedures covered in the report this past year, and my insurance carrier pays nothing close to the amounts in the report. The amounts they actually pay is closer to the Canadian costs.

The only procedure that comes out higher than the others is “routine office visits”. The report states the range is $59 to $151, with Canada’s system reporting $30. While my doctor’s office does charge my insurer $75 for the visit, the negotiated amount that Aetna pays him is $43. Add my $20 co-pay, and the doctor’s visit is $63. That’s the rate paid to every doctor in the area who accepts Aetna’s PPO health insurance. I can make an appointment today for an opening in their schedule tomorrow, and I’ve never had a problem getting in on the same day if I’m in pain. I’ll pay a $33 premium for that kind of service. And I’m in better shape than Argentina, where a “routine office visit” is $75.

The slide show really goes off the rails in respect to medical imaging charges. It shows a CT scan of the head ranging from $950 to $1,800 in the US, yet the first “online price comparison site” I went to shows an average cost at $200 to $400, in line with all the other countries except Spain and the UK. The costs listed at Scan Directory are an example of “free market” costs where consumers choose to have the scans as a preventative health measure. These costs are rarely reimbursed by insurance, but are equal in every respect to the prescribed scans from your doctor (including review by a radiologist).

Why is the true cost of these vanity scans so much less than the “list prices” the study has? Because the provider is expecting people to pay the asking price. I have found that the insurers pay about that same amount, and not the list price.

For example, my wife’s MRI was billed to the insurance at $2,800, but paid at $520 when you include our share of costs and the actual insurance payment, an amount comparable to Canada’s wait-prone system. We got her MRI within a week of it being prescribed.

So why is Kaiser Permanente’s CEO publicizing these inaccurate costs? Perhaps he doesn’t know what his company is actually paying for these services (someone should tell the stockholders!) The large health insurers have much to gain from government mandated health insurance coverage. Even with the reforms of eliminating pre-existing conditions, forcing every American to sign up with a health insurer means that Kaiser’s rolls will swell with millions of low-cost (read: healthy) enrollees into the system, and force others with minimal coverage to enroll in plans that meet the government standard.

The Cato Institute’s director of health policy studies Michael Canon notes:

Compulsory health insurance could require nearly 100 million Americans to switch to a more expensive health plan and would therefore violate President Barack Obama’s pledge to let people keep their current health insurance. In particular, the legislation before Congress could eliminate many or all health savings account plans. Making health insurance compulsory would also spark an unnecessary fight over abortion and would enable government to ration care to those with private health insurance.

Canon goes on to explain how experience has shown that compulsory insurance necessarily means increased government influence in health care:

The experience in Massachusetts belies the claim that compulsory health insurance brings down health care costs. The “shared responsibility” ruse allows Massachusetts politicians to declare success for a compulsory health insurance scheme whose actual costs reveal it to be a failure. Massachusetts also demonstrates that compulsory health insurance enables, and ultimately requires, politicians and government bureaus to control nearly all aspects of health care and medical practice.

Giving up freedom for security is often a risky business, but when you relinquish freedom in exchange for less security, based upon less-than-true statistics, you have made a poor choice. Let’s hope Congress fails to make that choice this weekend.

Politics compulsory health insurance, health care cost, health care reform, health insurance, MASS Health

The law of unintended consequences always seems to surprise our lawmakers. Democrats can’t seem to understand that a “public option” for health care insurance will compete unfairly with private insurers, even the non-profit ones like Kaiser and Blue Cross. And the costs of that public plan will exceed all estimates due to swelling enrollment.

Hawai’i’s Keiki Care, intended to cover uninsured children not eligible for Medicaid, was abandoned in late 2008 after enrollment swelled far beyond the estimates. The reason? As KaiserNetwork.org indicated:

According to some state officials, many of the children enrolled in Keiki Care previously had private health insurance, the AP/Herald reports. Kenny Fink, administrator for Med-QUEST at the Hawaii Department of Human Services, said, “People who were already able to afford health care began to stop paying for it so they could get it for free.” He added, “I don’t believe that was the intent of the program” (Niesse, AP/Miami Herald, 10/17).

It isn’t just individuals that will willingly abandon higher cost private health care plans, but employees forced to move to the public option by their companies.

Remember the controversy when large companies like Walmart started filling their ranks with part time employees, thereby avoiding the benefits that flow to full time employees? Public opinion was shocked to find out the companies were providing brochures explaining how the employees could get Medicaid coverage from the government to replace their missing company health plan.

The response from lawmakers has been to try and craft a “play or pay” provision fining companies that eliminate their in-house plans. But the temptation will still be great for a CEO to scuttle the in-house plan for other cost savings … reduced staff in HR, decreased uncertainty about future costs, etc. Because many companies ’self insure’, with the insurance company acting as the plan’s administrator, health care costs represent a variable cost, just one illness away from spiraling out of control. Having a number you can budget for, such as the “play or pay” fine, means good management can just cut back a few more jobs, hire more part time workers, and eliminate the company health plan.

Robert Moffit, director of the Heritage Foundation’s Center for Health Policy Studies, explained the reasons a public plan simply won’t work in testimony before the House Education and Labor Committee:

Moffit dispelled popular belief that a government-run health insurance plan would compete on a level playing field. “There are a lot of ways to improve competition in the health insurance market without the public option. The public option doesn’t solve the current problem of consolidation — in fact, it makes it worse.”

A public option with any special advantages, such as being able to use Medicare payment rates, would reduce the number of private health plans, and thus further consolidate the insurance market, Moffit pointed out to the committee. This would worsen the very problem champions of the public plan in Congress say they want to fix.

To compete fairly, a public plan would have to follow all of the rules and regulations current health insurance plans face, including laws for malpractice tort and contracts. “It should be allowed to compete for business and fail, without artificial bailout from the government” if the public plan loses market share, Moffit said.

Massachusetts’s universal health plan, long discussed as a possible model for the nation, is facing budget crunch pressures. The solution? Eliminate “automatic coverage” for the poor, and eliminate dental coverage. This “limited coverage” rationing is a foreseeable result of any national “public option” plan, as the promised cost savings never materialize. As Democratic Treasurer Timothy P. Cahill told the Boston Globe:

“We’re all still waiting for the savings,’’ Cahill said. “Universal healthcare was supposed to eventually save us money.’’

“It’s a warning for the federal government as it looks to do something similar,’’ he added. “I’m not saying we can’t afford any of it, but it certainly doesn’t appear that we can afford all of it.’’

The public option is another lesson in the law of unintended consequences waiting to be taught. But, unfortunately, its a lesson our legislators are apparently unable to learn.

Business, Politics Keiki Care, MASS Health, public option, Walmart