Medical Reform: The Cost Burden Now

medical_expensesI’m not a doctor, though I come from a medical family. My father, older brother and middle sister are doctors: 2 pathologists and one family practitioner turned PhD researcher. My one direct medical experience, six years working in a medical laboratory, was three decades ago.

So, if I’m going to comment on American health care, it is as a user of services. I’m aware of some of the issues that providers of services have, but I don’t have any special knowledge. No, my here-and-now ability is to offer what I truly know that few other people do: the cost of the current system.

I’ve been an entrepreneur for almost 20 years now, which makes me a long time, direct purchaser of workplace-sponsored medical insurance. I know EXACTLY what it costs to keep insurance for my very healthy family. Most people are blissfully ignorant of the burden they face.

I’ve been very happy with the services at Kaiser Permanente. For those who don’t know, Kaiser is a fully vertically integrated medical services group in California, with state-of-the-art facilities in Los Angeles and other cities, along with satellite clinics offering day-to-day care. Most Europeans would be comfortable with the organization that they use to distribute services.

When I have compared prices and services (always VERY hard to do with US medical insurance), Kaiser seems to rank high in the services-offered-for-cost category. And they are considered inexpensive by American standards.

Let me say that again. These prices are VERY LOW for the United States.

THE COST OF MEDICINE IN THE UNITED STATES

So, let me tell you what it costs for all medical services for my family. This is EVERYTHING (company insurance payments, personal co-payments, prescription drugs, etc.). And we are HEALTHY – no cancers, no broken bones, no serious illnesses of any kind.

2006: $7933.94

There were 22 recorded visits to the nurse or doctor in this period. My son had out-patient surgery on his hand (trigger finger) this year, which added to our costs slightly (probably $250).

2007: $8266.75

Only three recorded clinic visits this year. No births, no major illnesses.

2008: $11,967.86

There were five Kaiser clinic visits during this period. Also, for accounting reasons, the $400 charge for delivering my son Aaron was paid during the 2008 period, even though he was born in 2007. We only kept my wife in the hospital for one day with the delivery since Kaiser would have charged us an additional $400 per day for any more days she might have spent there.

We spent about half the year living in Europe in 2008. This means fewer Kaiser clinic visits, but it also means an additional charge of $803 to cover the family in Hungary should anything happen to us (most of this insurance is simply to fly the family back to the US in case of an emergency). We did not save any money being out of the country, since our insurance is tied to our official country of residence – the United States.

2009: $13,929.29

This includes $400 charged to us for the birth of Veronica. We had 13 visits to a nurse, midwife or (more rarely) a doctor in this time (mostly pregnancy related or checkups for kids).

I could report expenses for earlier periods – I have an accurate accounting of all medical expenses back to the formation of my current company in 2003. However, since insurance costs vary depending on whether you have one or more children, they would not be directly comparable to each other. The costs I have listed here are ABSOLUTELY COMPARABLE. They are for the same services, from the same company, for the same recipients.

Don’t be surprised by the size of these payments. Yours are similar, let me promise you. The percentage of US GDP devoted to health care is 15.3%, and that money does not come from thin air. It comes from your pocket.

And prices have NEARLY DOUBLED in just three years.

HOW THIS REALLY, REALLY SCREWS THE AVERAGE AMERICAN

I’ve posted this very private information for a reason. It’s very clear that most people DON’T know the cost of insuring a healthy family. If you are receiving health insurance from your workplace or school, let me assure you that the money we’re spending here is very similar to what is being spent for you by your employer/educational institution. They’re very aware of what it costs them to keep you, even if you don’t see it on your paycheck.

This is a TAX. Everyone MUST pay it, even if you don’t know it’s being paid for you.  The only difference is that, instead of the IRS hunting you down if you don’t pay, here the aging of your own body works against you. Or the pickup truck of the local plumber plows into your son while he’s biking home from school. Or the smoking you gave up years ago shows up as a lump in your lungs. Personally, I’d prefer the IRS.

Worse, this is a HIGHLY REGRESSIVE TAX. Everyone must pay it and the poorer you are, the more you have to pay. While the very poor can get subsidies through Medicaid or other social programs, everyone working a job with health benefits has this money silently siphoned out of their paycheck every week. The rich do not spend much more on their health insurance than the working poor. This means that a far larger share of a working person’s income is being taken away than it is from someone more able to pay.

Say you are in my situation – mid- to early-40’s couple with 2+ children. If you’re working for $60,000 plus benefits, then there is a silent $14,000 that your company pays without your knowledge to keep your insurance current. That’s almost 25% of your income. If, however, you are the successful salesguy of the company, also mid-40’s with a wife and 2+ kids making $250,000 a year, $14,000 is also being paid for you – 5.6% of your income. In effect, the poorer workers are subsidizing the better paid workers. Don’t get me started on TARP-cashing bank CEO’s!

The insidiousness of this is that it is all completely invisible. You know you need a job with benefits, but you don’t know what they cost. You don’t know that it’s a tax, or that it’s a tax that forces the rich and the poor to pay the same dollar figure per person, even though the rich can afford more.

I don’t know what the best answer is to medical reform, but I can tell you that the current system is deeply broken and unnecessarily expensive. And unless those people who know the costs publish what they are paying, there is no way for others to (accurately) know the real price of medicine in the United States.

My data here is accurate, to-the-penny. And I’ve shopped for the cheapest, but best service that I could find. These figures are free for anyone to use, from either side of the debate, so long as they are attributed. And I encourage others with similar information to publish theirs.

3 Responses to “Medical Reform: The Cost Burden Now”

  1. CRS says:

    This is very interesting and thanks for posting. I think I may share it with my law class in our discussion of human rights, the UDHR and of course the article saying health care is a right. Did you see Dilbert’s blog(s) recently on healthcare? Interesting stuff.
    Question though: you added two new people. Aaron and Veronica were both added in these years. Didn’t they effect your cost?

  2. Ed Steussy says:

    At least for Kaiser, first and second children both add to the insurance cost. Children beyond that do not. It makes some sense – by child three, parents are more likely to be able to handle most basic illnesses themselves.

  3. CRS says:

    Plan Annual Cost
    Kaiser Permanente $9,479.40
    PacifiCare HMO $11,415.00
    PacifiCare POS $13,858.68

    We get to choose one of three plans. If we want to switch this is the time we must do it (open enrollment they call it) and FOI they posted the costs they pay per employee. Thought that you might be interested.

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