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The High Cost of Health Care: Where is the "Missing Money" Going?

Updated on May 17, 2013

Introduction

I am a 20 year old in an 80 year olds body. I have heart pains, asthma, and spine problems. Therefore, I know all about the high cost of health care. I began to question the health care system, why are the costs so high? I wondered where all the money was really going; did doctors receive most of it?


Where is all the Leftover Money Going?

On average, spinal fusions cost over $100,000, and this costs sometimes rises to $200,000+ depending on what is involved in the surgery (sometimes an anterior and posterior operation is necessary). Before I started having back problems, I had no clue how much back surgery costs! There was no exact information online, but I am conservatively estimating that orthopedic spine surgeons perform at least 100 surgeries per year. Orthopedic spine surgeons make around $700,000 per year (and in my opinion, this is more than fair for what they do). Again, there was no exact information online, but I am going to conservatively estimate that anesthesiologists monitor at least 200 operations per year. Anesthesiologists make around $400,000 per year. Also, if the surgery is complex (such as reconstructive spine surgery for someone with Scheuermann’s kyphosis); multiple surgeons often perform the surgery. In these cases, the cost for the surgery often totals well over $200,000. Crunching these numbers reveals that the spine surgeons, anesthesiologists, and assistants/nurses are only paid a fraction of the total cost of the surgery. From my calculations, paying these people represents no more than a quarter of the total cost of the surgery. I used spinal fusion surgery as an example because I have done a lot of reading about it; however, these concepts apply to every medical procedure. The question is: where is the rest of the money going?

The Leftover Money is Going to Pay for Inanimate Objects

The rest of the money is going to pay for inanimate objects such as hospital rooms, surgical equipment, etcetera... While medical instruments, such as titanium rods for spinal fusions, are not cheap to manufacture; there is no reason for them to cost as much as they do. According to an article by CNN, a woman was billed $863.20 for disposable forceps used in her procedure (whether or not she had insurance, I do not know). The average hospital stay for a night in the hospital is $5,000. These costs are drastically inflated.

Why is the Cost Associated with these Items so High?

At a glance, it might seem as if money is disappearing into thin air; however, money is always going somewhere. The high cost associated with health care in America today was caused by insurance companies. Hospitals bill insurance companies unrealistic amounts because the insurance companies allow them to; it is no big secret that insurance companies and hospitals are best friends. It is easy for hospitals to do this because they are not dealing with the patients themselves. I believe that this issue exposes the dark side of privatized health insurance. I believe that health insurance companies have allowed the negotiation of extremely high rates in the hopes that they will “motivate” more people to buy health insurance. Health insurance companies have turned the American healthcare system, which is supposed to be a service industry, into an impersonal money cycle.

Interesting Supporting Facts

  1. Because of health insurance companies, many people are unable to get the health care that they need.
  2. Health insurance companies have introduced a large amount of fine print into the health care system. I believe that this is in part to keep the average Joe from realizing what is really going on.
  3. More and more people are traveling to places like Mexico or India for their medical procedures, and I find that horrible for multiple reasons.
  4. People who pay out-of-pocket for their medical expenses do not have to pay as much as would be billed if they had insurance.
  5. Many people have insurance that will not even cover enough of the cost of a surgical procedure for people to be able to afford it. The insurance that will cover a higher percentage is very expensive.
  6. Health insurance companies have also inflated the price of medications. I can attest to this. I take the Advair® inhaler; the co-pay for my inhaler is $70 for a one month supply. I find that ridiculous. And when I went to physical therapy for my back, I was often billed over $350 per visit (most of which my insurance paid).

Conclusion

I do not believe that health insurance companies are completely evil; they have helped numerous individuals receive the care that they need. I wrote this article because I strongly believe that health insurance companies need to reform and become more transparent. United States has the highest trained medical professionals in the world; however, our medical payment system is flawed. I rest my case. Thank you for reading!

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