Stossel Debunks Health Care Cost Myths

One of my favorite TV debunkers, John Stossel, takes on health care and health insurance in America.

In Friday night's 20/20 he asked why health care in the US is so expensive? He also gets into some of the solutions proposed by many of the Democratic politicians (Universal health care? Don't they mean socialized medicine?), and supported by Michael Moore.

Stossel talks with Michael Moore about his movie, Sicko, and how it gives the false impression that the health care systems in other countries are so much better (they're not).

Even Canadian doctors slam the national health care system in Canada, saying “Sure it's free, but you'll have to wait 6 months to get treatment.” The artificial shortage has created a demand for black market for-profit clinics, which are now popping up all over Canada. Even the head of the Canadian Medical Association has one of those for-profit clinics because he got tired of not being able to treat patients needing care now, not six months from now.

As I've said here more than once, one reason that health are costs so much is because of health insurance. Between the costs of processing insurance paperwork and the time doctors also have to spend dealing with it, is is any wonder that the costs keep going up and up?

Health insurance also has another downside – people demand more and more medical care even when they don't need it because, after all, it's not like they're paying for it, are they? That may be a good reason for high deductibles before insurance starts paying.

One analogy that Stossel uses to illustrate the problem with health insurance is to ask about what food would cost of there was grocery insurance. The answer: more than someone without it could possibly afford. With grocery insurance I wouldn't waste my time buying the hamburger. I'd go for the sirloin steak tips, Why shouldn't I? It's not like I'm paying for it? Of course the grocery store or supermarket's costs will goo up due to all of the paperwork needed because of the grocery insurance. (Yeah, it's not a great analogy, but still it is a decent comparison.)

Another thing that has driven costs up is the lack of competition. If you ask your doctor how much a physical costs, I doubt very much that he or she could tell you. Why? Because they have no idea. It isn't something they think about because most of their patients have health insurance, so they don't need to know.

A perfect example of how competition can help is to look north into Canada again. Costs at the private for-profit clinics are a fraction of what they are in the national health care network.

Need another example?

As costs for almost all fields of medicine have gone up, costs in two have gone down dramatically. Can you guess which two? I'll give you a minute.

(Insert Jeopardy theme here.)

Would you believe it if I told you that LASIK eye surgery and plastic surgery costs have plummeted? The reason – they aren't covered by health insurance. People pay for those procedures out of pocket. They shop around for the best deal, taking into account the reputation of the physicians they'll be dealing with. That ought to tell you something.

To prove that point Stossel visits Doctor Robert Berry, whose practice no longer takes insurance of any kind. He lists his prices for various procedures and takes cash, check, or credit card. His costs are a fraction of what other doctors charge because he doesn't have to deal with the insurance companies or government bureaucracies. He knows exactly what it costs to do physicals or other procedures. Because he is unencumbered by all of the usual overhead, he gets to spend more time seeing patients. He has a smaller staff than a practice like his would normally require because he doesn't have to process insurance forms. Yet, he makes just as much money as he did before he changed over to a non-insurance practice.

The quick clinics popping up in malls, shopping centers, pharmacies, and in some of the larger retailers (like WalMart) also give us an indication that competition may be one of the cures for the ever climbing health care costs. These clinics can usually deal with the smaller medical problems like colds, sore throats, ear infections, and the like, but at a low cost and with little waiting. Like Dr. Berry mentioned above, the clinics take cash, check, or credit card, but not health insurance.

They offer people with sore throats and ear infections convenient care … cheap. Most everything costs $59 or less.

But how can they make money charging so little?

"They're figuring how to do something faster, better, cheaper," said Grace-Marie Turner of the Galen Institute. "They're responding to consumer demand, because they see that they might make some money on this. Profit! And, look who's winning. Moms and dads and kids. Because they now have … easy access to routine health care."

Like any other industry out there, competition lowers prices. However, the medical field has little if any competition, hence prices much higher than they might otherwise be. In those medical fields where competition is taking place, prices have been dropping. That ought to be a big clue that opening the rest of medicine to competition would do likewise. But I doubt that we'll ever see it. It makes too much sense and the medical and insurance lobbies will do their darnedest to make sure it doesn't happen. They have an all-but-monopoly on health care and they want to keep it that way.