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Let’s say you have $50, $100, $200 and $500.
I’m quite certain from time to time the average American would find spending those amounts affordable – on say a manicure, a round of golf, a tattoo, a couples night on the town or even attending a sporting event. For many people this would be true even if they charged the expense.
It’s quite natural we receive pleasure from spending money, depending on what it is spent on. But there is difference. The same amount that is affordable on one item can easily be made “unaffordable.”
It’s true, take those amounts above and apply them to health care and everything changes. How do I know? Decades of managing health benefits and working with the people using them has clearly demonstrated the phenomenon to me.
Walk into your pharmacy and find the Rx co-pay is $50 and a financial crisis occurs. That’s the same $50 spent on a manicure the week before, just a routine expense.
But it gets curiouser. A test of some kind is denied by insurance, you are appealing the denial, but your doctor says you need the test now. It costs $500. What do you do?
I had many people tell me their health was in jeopardy by delaying a test, but paying for it themselves while fighting over payment was rarely considered. It was like the test was only life threatening if someone else paid.
Trust me, I am not exaggerating or cherry picking. $50 is not always $50. Spending OUR money on health care is always unaffordable.
This basic quirk in logic is why we can’t fix health care, why people in other countries feel their health care is “free” because at the point of service costs are hidden in taxes and premiums and people like it that way.
Except in the United States, we tend to think we should have no OOP costs, but also want minimum taxes or premiums offsetting that spending.
I was so excited to see the $2K cap on Medicare Part D expenses. We have had $8-10K costs for years. Last year I saved enough to cover the $8K because I really did wonder if the $2K would hold. Now with Musk and Congressional meddling, I am worried all over again.
The cap only applies to drugs on the plan’s formulary. This year most plans dropped the expensive drug I used to take for rheumatoid arthritis. The two that still cover it have high premiums.
The cap is not by plan, but aggregate is it not. A Part B plan must offer at least one drug in each class. It can’t drop your drug unless there is a drug class alternative. Is that not the case?
I have no idea what you mean by “aggregate”. Plans drop drugs all the time. A lot depends on how you define “class”. Methotrexate (generic) is a RA drug, but the new biologics tend to be much more effective. And much more expensive.
This effort on Part D will eventually drive up the cost of medication. After this was implemented, many organization dropped Part D coverage and congress is subsidising part of Part D with the remaining companies still offering it in Medicare. It sounded like a good idea, but without understanding details it becomes a problem. Nothing to do with the D or R team, just the basics of business. Companies will not lose money.
Chris just came home from the orthodontist. She has been biting her lip frequently. Her teeth have moved over the years and the dentist sent her to an orthodontic clinic to discuss invisalign braces.
The total bill will be about $6500, she feels guilty and does not want to spend the money. I told her that it’s a quality of life thing, and doesn’t cost any more than the ring on her finger. That put it in perspective for her, and eased the pain of the expense. She goes in next week to begin the process.
So it’s like you described; buying that ring was exciting and fun, paying the same money for an uninsured but necessary dental procedure is the opposite.
My teeth had shifted and I needed some straightening about 4 years ago (uppers and lowers). At the time invisalign was about $4K, but my dentist used some other brand and it was $2K. I don’t know but you might want to shop prices in your area as $6500 seems kind of high. I do know that different dental providers can charge a wide range of prices for the same services even within a given geographical area.
My take on Invisalign is to only do it if there are no other issues with your teeth. I wore Invisalign for a year and ended up having to go with braces. Invisalign won’t fix everything. Insurance paid for the first go around, but the braces I had to pay for.
Mark Cuban’s non-profit pharmacy helps a lot of patients: https://www.markcubancostplusdrugcompany.com/
Doesn’t cover the rheumatoid arthritis drug I write about below.
They only contract with manufacturers for generics
But does the test really cost $500? You don’t know until you get the bill which is the problem with healthcare in this country.
You can ask what they charge and you can ask them to accept the same payment they do from insurance which likely will be a big difference.
The real problem is that for the identical service Medicaid pays the least, then Medicare – which amounts don’t cover costs in some cases – then regular insurance with some variations among networks and finally the self-pay person who makes up the slack.
The price charged has to deal with all that. The reality is that citizens are subsidizing both Medicare and Medicaid beyond taxes. Because of artificial low payments their true cost is masked and regular premiums driven higher.
A typical doctor’s practice deals with around seven different payers, some groups many more. When I have asked the billing people who is easiest to deal with, the answer is always the same – Medicare – they don’t question anything.
Maybe that’s why there is so much fraud with Medicare……’they don’t question anything ‘.
Audits of SS going back many years have said the same thing and urged changes, but imagine now if Medicare applied the same scrutiny private insurance does. Seniors are used to pretty close to a blank check.
Many services have no limit other than medical necessity and then Medicare simply accepts whatever the provider says is necessary.
Many things have been a fight with Medicare, as well. If you have an uncommon ailment, it is work to get what you need. Although your carrier matters, the level of care depends on the policy you chose. Doctors have a lot of clerical expense as well as dealing with delayed payments from Medicare.
I tried that insurance price angle before and the medical provider always tells me that that was a negotiated price for a certain group. So how do I get that insurance rate Dick
No doubt it was, but that doesn’t mean they can’t charge you what they want. Evrry plan they contract with likely has a different rate.
C’mon. Is there such a thing as a free lunch or not?
I get it Richard. On a recent trip to the Costco pharmacy the clerk began apologizing for the price of Chris’s Rx. The cost was about $70, not covered by insurance, and she was certain we would complain, which suggested to me that she was used to getting yelled at by irate customers.
The last script I had I was told it was $697. I’m not paying that I said. The clerk at Walgreens said, oh, let me see if there is a coupon, now it was $197.
That’s because, BY LAW, pharmacists are NOT ALLOWED to tell you of a cheaper way to get the medication. They are only legally ALLOWED to do so if the patients asks first.
Just now saw that Scott said the same thing farther down. Good to know that my facts are correct !
Currently I get my prescriptions filled at Harris Teeter. They always check for the lowest available price. When I was on an insanely expensive rheumatoid arthritis drug I went to Costco, as they usually had the cheapest price under my drug plan (forget coupons with really expensive drugs). You don’t have to be a member to use their pharmacy. I avoid CVS and Walgreens as they seem intent on buying up everyone else.
Have you ever tried GoodRx or similar? That’s what I meant by coupon.
Yes. That’s what I meant by saying that Harris Teeter checks for the lowest possible price. It’s also what I meant by saying that coupons don’t help much with really expensive drugs (think $6,000+ a month retail).
I just looked up the RA drug I used to take on GoodRX. With a coupon Walmart is $8,849, Walgreens is $6,218 and Harris Teeter is $5,914, for a month’s supply. Drugs.com lists the price as $6,350 and up.
I priced 60 five mg tablets. Oddly, 30 ten mg tablets, also one month’s supply, are about half the price. Can we agree that drug prices are crazy? This drug was developed with help from the government, and when first released around 2012 was $2,000/month. Most drug plans no longer cover it, since the $2,000 annual OOP cap went into effect.
Our insurance premium went up $300 to account for the new Part D. However, it is still cheaper than before.
Everything about healthcare pricing is crazy. No other business prices its goods or services like healthcare. I use Goodrx but I don’t understand how it makes money and why my policy doesn’t offer the same pricing.
Did you know that contractually they can’t offer the discount until you refused to pay? What a horrible system!
GoodRx is your friend, if for no other reason than it price shops it for you, and if you have expensive scripts their premium package will frequently pay for itself if not show a profit.
I think the average American would have difficulty paying for any large medical expense. This is a much larger problem for society than the attitudes of those who don’t want to pay for small medical expenses.
I would agree if the charge is thousands, but the point is more often than not large is defined at an amount where the same amount is easily spent on many other things. Why for example do we have a law requiring free birth control or limit insulin co-pay to $35 and no deductible under Medicare?
The US spent $4.5T for medical care in 2024. With a population of 330M, that works out to a cost per person, man, woman, and child of around $13.7K. So that cost for a family of four would be on average $54.5K.
There are so many things wrong with this system that increase costs, and create waste. Focusing on the flaws in human nature shown in how people spend money is disingenuous.
When the median household income is $80K, you have an unworkable system when half the population cannot create enough economic wealth to cover the cost of their health care. Perhaps this is why 40% of bankruptcies are due to the cost of medical care.
Human nature is what allows the system to exist or we would have a form of M4A now.
And no, 40% of bankruptcies are not due to medical costs. Bankruptcy filings list the cause of debt and many people include medical, but the cause is accumulated debt far beyond medical.
Few bankruptcies are actually caused by only medical debt. Given all the sources of coverage, most of it heavily subsidized, why should bankruptcies be based on medical?
You could say a family with a high deductible may face say $5,000 in deductible and out of pocket costs, but you have to consider than in the context of all spending.
As I tried to point out, the way we view health care spending is different. we don’t think about that spending in the same way we do a car lease for example.
Last time I had surgery, they wanted $700 up front to schedule. Many people do not have that amount in savings.
And you shouldn’t pay it either.
By “human nature” allowing the system to exist, would you be referring to massive amounts of money spent on lobbying and political contributions by the entities that profit from it?
Here is my source for the 41% number: https://www.kff.org/report-section/kff-health-care-debt-survey-main-findings/
What is your source that says that it is not 41%…..?
And, I think you have it backwards…..because folks must use Ch 7 of the bankruptcy act for medical debt, they must include all their debts, so will certainly have non-medical included. But, Ch 7 is their only way to get some relief for medical debt.
One more source for you:
https://www.retireguide.com/retirement-planning/risks/medical-bankruptcy-statistics/
Your source, a survey, says “The KFF Health Care Debt Survey finds that 41% of adults currently have some debt caused by medical or dental bills” okay, some debt, they owe an unpaid bill.
Birth control is a lot cheaper (and safer) than childbirth, and 42% of births in the US are covered under Medicaid. It makes financial sense to provide free birth control. I agree with David and Scott – there was no excuse for the cost of insulin (and $35 doesn’t sound particularly cheap for a must-have generic).
Sorry, your logic escapes me, but I think you prove my point. How does it make sense to make it free?
Are women going to get pregnant because someone else is not paying for their birth control?
We are not talking about poor people, they were already taken care of. it’s free to families earning $100,000 a year or a million.
As far as insulin goes the point was not the cost of insulin but why, when there are more expensive far wider used critical drugs was insulin singled out for the cap?
The answer is a campaign of misinformation about pricing (using retail amounts that virtually no one paid) and a series of emotional horror stories, but it was a health issue and we are not able to logically deal with them. About 2.5% of Americans rely on insulin. 35% take a heart medication.
Poor folks are not taken care of. Many states have refused federal Medicaid monies, or have purged members. Still a lot of Puritans out there who punish those who are poor or in bad circumstances. Living in the US is fragile.Medicaid – Statistics & Facts | Statista
Most of your points are very valid RDQ, but insulin was discovered in 1921. I don’t know how much it costs to produce, but the pharmaceutical companies years back just kept jacking up the price solely to Jack up their profit margins.
A similar patent example is albuterol which was patented in 1972. The company kept getting extensions on their patent (the last for a change in the propellant only) so no generics were approved until 2020, a total of 48 years. That’s just one small, but egregious example of how political donations and lobby inflate healthcare costs.
Manipulating patents is clearly an abuse. One 18-20 years is sufficient to assure recovery of costs and more.
My point with insulin is why it was singled out for the $35 when there are many other life sustaining drugs used by many more Americans that are expensive. When it was a hot topic the prices quoted were published retail prices that virtually no one actually paid.
Probably because the discovery of insulin was gifted to the world and then was abused by others to create ungodly profits. That you had people dying because manufacturers couldn’t or wouldn’t produce basic insulin that would itself be profitable at $35/month was a scandal.
And I’m a fierce opponent of price controls, but this one, was just beyond the pale.
David, Richard and Scott, did you know that that idea for $35 insulin was actually originated by a manufacturer? Lilly proposed it in 2019, and presented the idea along with United Healthcare.
Lilly had discovered that they could generate more revenue at the $35 price point than they could at higher prices.
Why? Because their research had shown that above $35, the poor delayed refilling their prescriptions to save money, and started stretching their insulin supplies. And it was costing health complications and even lives.
The $35 is what the patient pays, not what the manufacturer receives. The cost above the $35 is built into premiums so everyone is paying. That’s true with any mandate like free contraceptives, somebody pays.
The point is relatively few Americans rely on insulin compared with other drugs like heart medications. The poor, presumably on Medicaid weren’t paying much if anything.
What makes you think it costs more than $35 to manufacture and distribute? One source says $2 to $10 per vial. Another, from 2021: “based on [active pharmaceutical ingredient] costs, insulin analogues should cost at or below U.S. $133 per year while real human insulin should cost at or below $72 per year. With annual insulin costs pushing $6,000 per year, U.S. insulin prices are indeed inflated.”