Health Care Puzzle

Here is a WSJ guest opinion piece (article was accessible without an online subscription) by a finance professor with the Cato Institute who summarizes the many failings of the health care industry.  They include what amounts to racketeering by the AMA and Congress, an insurance system geared to raise costs in the health care industry, the lack of consistency in the tax treatment of insurance policies, and the lack of individual choice or portability – to name but a few.

Health care is one area where libertarians meet liberals in some agreement.  

Here is a 2007 thought piece by Brad DeLong on some rather simple solutions to the problem of catastrophic health care costs.  Can you imagine a world in which a person who makes $50K a year can rest secure that no matter what illness or accident happens to them, their out of pocket expense will be no more than $10K for that year?

Many years ago, I got a piece of metal in my eye and scored up my eyeball trying to get it out.  It was evening and my doctor’s office was closed so I went to the emergency room at a nearby hospital.  I had catastrophic health insurance with one of the largest insurance carriers in the country, but I had a deductible on the policy that wasn’t meant to cover the rather small cost of an ER visit for an eye injury. 

With my hand covering my painful eye, I presented my ID and insurance card to the ER admitting clerk.  “We don’t accept that insurance,” she said. 
“I’m not expecting this insurance policy to cover the cost of the ER visit,” I replied, “because of the deductible.” 
“No, we don’t have an agreement with this insurance company,” she replied. 
“What do you accept?” I asked.  She mentioned Blue Cross and one other. 
“Well, how do I get care?” I asked. 
“You pay [$560 in today’s dollars] and we will have a doctor see you as soon as possible,” she said.
“Do I get a discount for paying cash?” I asked.
“No, there are no discounts,” she said.
Having nowhere else to go for after hours care, I said “Ok, where do I sign?” 
“You have to pay first,” she said.
“What if it doesn’t cost this much?” I asked.
“The hospital will mail you a refund,” she said.
“What if it costs more?” I asked.
“The hospital will send you a bill,” she said.
“Just out of curiosity,” I asked, “what if I had a Blue Cross policy with a deductible like the one I have?”
“Then the hospital would bill you, she said.
“Would it be the same price?” I asked.
“It would be at the price set by the insurance company and the hospital,” she answered.

The care was excellent and done quickly with little waiting. I was out of there in less than an hour.  The hospital did bill me for a small amount in addition to what I had already paid. 

Over twenty years later, does a similar story still play out in emergency rooms around this country?

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