Monday, May 19, 2014

Take two asprin and call me in the morning

I read an interesting article in the newspaper this weekend discussing the sky-high cost of the American health care system.  Because they are so visible and their fees seem so high (at first glance), doctors get the rap as the primary cause of our borderline-affordable medical care nightmare.  Turns out they aren't even close to being the highest paid links in the health care chain.

The story reported that the average surgeon makes $306K and a general practitioner makes on average $185K.  Considering all the education they must complete and the ungodly amount of medical school debt they assume, not to mention the literal life-or-death role they play, I don't think they are overpaid at all.  

And just FYI, the average nurse makes $61K and the average emergency medical tech makes $27K.  I think we patients are getting off cheap!

So where are the all the big bucks going?  The story suggested too much goes to administration / executive compensation.  For example, the average insurance company CEO makes $584K, the average hospital CEO $385K, the average hospital administrator $237K.  

Of course, the bigger insurance companies and hospitals pay WAAAAAY more than that.  Aetna CEO Mark Bertolini was given a salary in 2012 of $977K, with total compensation amounting to $36 MILLION!  Even the CEO of mid-sized New Jersey health system Barnabas Health made $21.7 MILLION total compensation in 2012 when he retired.  They also had 20 VP's who made over $350K each.

It seems the United States' $2.7 TRILLION health care system is top heavy with administrative costs, to the tune of 20-30% or $606 per American.  By contrast, health care administration in France costs $277 per person, Germany $237, and Canada $148.  (And for the record, citizens of those countries all have longer life expectancies than Americans.)

Doctors here are even protesting, too.  "Among doctors, there is growing frustration over the army of businesspeople (medical coders, claims adjusters, medical devise brokers, etc) around them and the impact of administrative costs which are reflected in inflated charges for medical services", they say.

So how can these guys justify their enormous incomes?  They say "large pay packages are necessary to attract top executives who have the expertise needed to cope with the complex structure of American health care, where hospitals and insurers undertake hundreds of negotiations to set prices."

Talk about job security!  You make the system so unbelievably complicated very few can decipher it, then demand a King's ransom to oversee the mess you created.

But when Obamacare was in the planning stage, who did they turn to for advice and political support?  The insurance companies and big hospital systems!  Well DUH!  (I guess they sorta had to, but still, their advice had to have been "cover your ass" biased.)

Maybe I'm getting way ahead of myself, but I'm wondering if that tiny little speck I see on the horizon coming headlong towards us isn't a single payer health care system....what its detractors call "socialized medicine"?  

My foreign friends say their system works well and we shouldn't be afraid of it.  Many Americans seem to think it will suck us all into a black hole of doom.  Me?  I have no clue.

I guess we'll just have to stay tuned.



  1. CEO salaries in most every industry are outrageous. I especially love when a company goes bankrupt and they still pay their CEO millions of dollars when really any bum on the street could have run the company into the ground as effectively and for far less. Executives are basically the new aristocracy.

  2. I think salaries in many industries are unfair. There should be a government agency that determines how much can be paid to any job or position to end the gouging and level the playing field. Teachers should be paid more, Actors and baseball players should be paid less.

    1. I agree it would be nice to find a way to pay people by their actual worth to society, but a GUBMENT agency to enforce it? All led by an overpaid gubment bureaucracy? Ouch!

    2. In some cases gubment oversight isn't all that bad. Wall street and the banks (2008) comes to mind. Wasn't that called deregulation?

    3. You got me there Bill. The banks proved that business can't "self regulate". We had a mechanism in place back then to oversee them, but it was asleep, compromised (many regulators were some day hoping to be in the employ of those they were now regulating) and just generally inept. Government regulation isn't a black or while issue. There are lots of shades of gray to be considered.

    4. Who else would determine who gets paid what? Maybe we just have to let the market decide and except it might not be fair in the minds of everyone.

    5. Joe, I like your answer...but you do realize that this sounds like "government telling business what to do."

      I remember reading that Medicare fraud is rampant (Florida is one of the worst states for it). Some politicians suggested privatizing or abolishing the whole system. The Obama administration quietly hired investigators and recovered millions of dollars. Yes, this is "more government" - government employees who make about $50K per year and recoup millions of dollars on behalf of the taxpayers. It's not sexy, it's not exciting, but it's nerdy accountants at work...and it works.

    6. That the answer you were looking for, Joe? The market is rarely capable of self policing....the banks proved that. But maybe some sort of compensation to shareholder dividend ratio?

  3. The insurance lobby made sure they would still be players in the whole costly health care industry. The only thing Obamacare accomplished was to bring the uninsured into the system. We are still being gouged by the insurance companies. Medical care has become an industry, driven by profit. Not just sustainable profit, but excessive and outrageous profit. Complex, secretive and excessive billing is the order of the day for hospitals at the expense of patients. All guarded by million dollar salaried administrators and executives. Until there is single payer, it will be (big) business as usual.

  4. What I want to know is why, every time my insurance changes (which has been annually, here lately), my doctor's office always always bills my blood work to the old insurance. What. The. Heck. :)