Administrated tyranny, a national extortion: healthcare costs!

Burns: We need a health care revolution now

Scott Burns,  Dallas Morning News

30 October 2015 

Fidelity Investments’ most recent study of lifetime health care costs made me shudder. It is now almost impossible for working people to educate their children and accumulate enough money to retire. You can’t get there from here.

How do I see such a global conclusion in a report on health care costs? Follow the numbers with me.

The headline number in the report is that a 65-year-old couple can expect to spend $245,000 on health care before they both die. That’s up $25,000 from last year, an increase of 11 percent.

Yes, you read that right. Up 11 percent in a period of low to no inflation. Up 11 percent when retirees will get no cost-of-living increase from Social Security.

The same report tells us that a single man can expect to spend $110,000. A single woman will spend $130,000. Those are intimidating sums. So let’s see what they do and don’t include.

The total expenditure includes Medicare premiums (parts B and D), copays, deductibles and out-of-pocket prescription costs. It doesn’t include dental expenses or long-term care. In each case, the figures assume you have the full sum on hand at age 65.

These figures, by the way, aren’t the kind of bogus claims we get from presidential candidates on the magical power of tax cuts. They’re legitimate research. The Employee Benefit Research Institute reports similar figures. So does the Center for Retirement Research at Boston College.

The numbers vary somewhat, but they converge on one central fact: They are all astronomical relative to the income and net worth of most retirees.

Cutting into net worth

You can see how big a problem this is by checking the net worth of those who are 65 and older. The most authoritative source for this is the Survey of Consumer Finance. The Federal Reserve did the most recent survey in 2013. The health care liability for women is greater than the net worth of 44 percent of women 60 to 65. It is greater than the net worth of 41 percent of men of the same age.

Here’s another way to get a sense of proportion: Use the average monthly Social Security check, $1,291, as a yardstick.

A man with that benefit would pay 85 months — more than seven years — of benefits for medical expenses over his remaining lifetime. For a woman with the same benefit, her higher medical costs would absorb 100 months of benefits. That works out to eight years and four months of benefit checks spent on medical expenses.

It would be ungrateful to complain about some of these increased costs. A portion of the cost increase is due to the ongoing increase in our life expectancies. According to the Fidelity report, the life expectancy of a 65-year-old man has increased from 82 to 85. So the typical retirement would last 20 years.

The life expectancy of a 65-year-old woman has increased from 85 to 87, a 22-year retirement. Added years mean more health care costs.

Eating up benefits

Now let’s combine life expectancy and lifetime health care costs. Health care costs are expected to absorb 85 of 240 months of Social Security benefits for men and 100 of 264 months for women. Change that to a percentage figure and it is 35 percent of benefits for men and 38 percent of benefits for women.

Health care costs are increasing faster than Social Security benefits. That means health care is crowding out the most important source of retirement income for most Americans.

Health care is no longer the large but reassuring elephant in the room. It is the monster in the room, feared by all.

Financial services firms use numbers like this to urge us to save more money. That allows them to appear caring and paternalistic as they push to gather ever more assets. But they miss the point.

Administered tyranny

Our politicians and the vast majority of people in health care miss the point, too.

There is a limit here, and we have reached it. The cost of health care has become an administrated tyranny, a national extortion. It threatens our ability to lead a normal life. People live in fear of any kind of health event, in fear of changes in insurance policies, in fear of cancellation of policies.

People live in fear of health care itself.

It’s time for change. Big change.

Scott Burns is a syndicated columnist and a principal of the Plano-based investment firm AssetBuilder Inc. Email questions to scott@scottburns.com.

Twitter: @assetbuilder

scott@scottburns.com

Costs vary wildly for knee replacements! Patients and doctors are in the dark.

A personal encounter with the cost of health care

Jim Landers

jlanders@dallasnews.com

Published: 27 January 2014 09:37 PM

Dallas Morning News

WASHINGTON — I often write about the cost of health care, guided by the perception that Americans pay too much and get too little in return.

On Wednesday, it gets personal.

I am about to have knee replacement surgery at a hospital in Alexandria, Va., just across the Potomac River.

Both knees are shot. I played too much football, had two surgeries for torn cartilage and ran for too many years on unforgiving concrete sidewalks. An orthopedist told me in 2004 that I could keep on running and soon face knee replacements or quit running and postpone the inevitable.

Nine years later, it’s hard to dance or even walk the supermarket aisles with my wife. Running is out of the question. At my last physical, I explained this to Dr. Bilal Desai, my physician. She gave me a referral to an orthopedic group.

“You need total knee replacements — both knees,” said Dr. Daniel Weingold, the surgeon who explained my X-rays to me.

We discussed alternatives — Ibuprofen, weight loss, intense exercise — but none of those would repair the damage. Weingold said he could do the surgery at Inova Alexandria Hospital.

More expensive

Inova owns several hospitals in Northern Virginia, as well as the outpatient clinic where Dr. Desai practices.

I remembered reading that a knee replacement at Inova Alexandria Hospital would cost as much as $5,000 more than at Inova Mount Vernon Hospital, a few miles away.

I asked Weingold. He doubted there could be such a difference between two Inova hospitals. Well, what are the charges, I asked. He did not know. None of the surgeons in his group practices at Mount Vernon, he said, but if I wanted to go there, we could stop now and I could go to another orthopedic group.

I said I wanted to talk with my insurance company.

I emailed BlueCross BlueShield of Texas, which administers our health plan here at The Dallas Morning News. I asked: Do you have any information about which hospital does a better job? What the costs are? Does it make a difference to you if one is cheaper than the other?

High-deductible plan

I was told that both hospitals are in our health plan’s PPO, or preferred provider network, as is Dr. Weingold. Since the hospitals are in Virginia rather than Dallas, I was told, BlueCross Blue-Shield of Texas doesn’t have much information to go on in terms of a recommendation.

Like a lot of people working for Dallas companies, we have a high-deductible health plan designed to make employees better health care shoppers. My deductible is $1,500, and my out-of-pocket maximum is $3,000. I knew I would blow through that, regardless of which hospital I chose.

I’m not eligible for Medicare, but I looked at the Medicare charge information for 3,000-plus hospitals in the country. In 2011, Inova Alexandria Hospital charged $32,051 for a total knee replacement. Inova Mount Vernon Hospital charged $27,549.

I looked at the charges for Dallas hospitals. Medical City Dallas charged $117,616. Baylor University Medical Center charged $43,852. Texas Health Presbyterian charged $58,854.

None of the hospitals in Dallas charged less than $32,938, which was nearly $900 more than the Alexandria hospital.

‘Medicine in America’

I went back to Dr. Desai and told her she’d referred me to an orthopedic practice and hospital where the charges were $5,000 more.

“That’s a lot of money,” she said. “Go to Mount Vernon.”

“But I don’t know a surgeon at Mount Vernon. I went where you referred me,” I said.

“I can write you a blank referral and you can find a surgeon and fill it in,” she suggested.

“Well, why don’t you know about the difference in these hospital charges?” I asked.

“We don’t know about that,” she said. “That’s just medicine in America.”

I’m having the surgery on my right knee at Inova Alexandria. I’ll see how it goes but expect Mount Vernon Hospital will get my left knee.