Holding Down Hospital Costs – Bob Lowry – Satisfying Retirement


By Bob Lowry

After last Thursday’s post about staying in your home versus making the move to a care facility, you may be worried I have become somewhat fixated on health and death. No, not to worry. It is just that last week’s post and today’s deal with subjects that readers have asked about. Plus, today’s subject is one that drives me crazy. There are fewer things that push me over the edge quicker than the absolutely ludicrous way medical care is priced in our country. There is virtually no way you can comparison shop, or even know what your bill will be until you try to check out. What other area of our economy has the nerve to sell a service without letting the consumer know the cost before committing to that service?

One year ago Time magazine had a cover story about hospitals and their chargemaster system. Entitled, The Bitter Pill, it detailed the complete disconnect between what hospitals charge for their services and reality. The article showed the huge price differences for the same procedure in different parts of the country and for different types of insurance.

The simple fact is that those without insurance or the ability to pay are charged the most for any services. On the other side of the spectrum, hospitals accept a small percentage of that maximum charge from Medicare. There is obvious unfairness of going after those least able to pay with the biggest bills and the very real possibility of bankrupting or financially ruining lives just because they can.

Yes, I know hospitals must treat anyone in the ER, regardless of insurance. A high percentage of those costs are eventually written off. But, to go after the poorest among us with guns blazing to make up for a flawed system is just not right.

Our system is not designed to make us healthier, in fact Americans rank dead last when compared to 16 other developed nations all while spending 250% more per person. True, we lead the world in medical technology and cancer research. But, for the day-to-day health needs of our citizens we perform terribly. Ours is the only country in the civilized world where our health options are controlled by private or publicly traded corporations who sell health services and prescription drugs for a profit first, and good health second.

All of this leads me to a story I saw recently that gives me hope that the shroud of secrecy over what hospitals charge may be finally showing some tears. A new web site is making an attempt to allow us to comparison shop, to have medical professionals and facilities compete for our business. Isn’t that how capitalism is supposed to work? Don’t we look for the best deal and service before we plunk down our money, particularly for something that may cost six figures?

Medibid.com has been around since 2010, but just recently has been getting all sorts of press and mentions. My guess is our increased focus on the actual cost of our  healthcare system because of the ACA (aka Obamacare) has begun to make people more aware of what it really costs to use our system.

Medibid allows the consumer to have doctors and hospitals or clinics bid on the cost of an operation or procedure. No longer must you shop in the dark. You get a guaranteed, in writing bid.

You may be asking yourself, “but why do I care? I have insurance. Whatever they pay, they pay.” I’d suggest there are two major flaws with that conclusion. First, your policy is going to cost you more every year in both premiums and a larger deductible with diminished coverage. That trend started over two decades ago, well before the ACA. While you could argue the new healthcare law has made it worse, I would ask, compared to what? Health insurance costs have averaged almost 15% higher every year. If you are part of the 80% of Americans who get health insurance through work you have been largely insulated from the true cost of taking care of you and your family. Only now are you beginning to see what our system really costs. One thing this is absolutely is true is that health costs would not go down.

But, that isn’t really where I want to go with this post. For all sorts of reasons Obamacare discussions tend to become filled with emotion and more heat than light.  So, leave that landmine alone for now and consider the second reason services like Medibid are potentially good: by allowing consumers to compare prices, hospitals and providers will be forced to compete for business. In our economic system competition means lower prices. Over time, maybe the absurdity of $15,000 a day hospital rooms will disappear.

One very important disclaimer: I have never used Medibid. I have no connection with the company. I start Medicare coverage in one month so I will be largely insulated from our silly system’s costs. Medibid may eventually fail for lack of support or some other reason. But, what it shows me is a movement toward transparency in medical costs…..and that is a good thing for all of us.

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Bob Lowry  is the author of the definitive retirement guides: Living A Satisfying Retirement and Building A Satisfying Retirement. Bob has been profiled in Money Magazine & CNNMoney.com as well as Ad Age Insight White Papers. He is a featured author in nationally released book, “65 Things To Do When You Retire” and “65 Things To Do When You Retire – Travel” as well as regular contributor to PBS’s Next Avenue web site.

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