Medical Care Is Expensive, But Not Because Of The Doctor

The New York Times has published its latest article in its quest to understand why medical care is so expensive in the U.S. Previous articles remarked on how expensive colonoscopies and child birth are compared to the rest of the world. This time, the offender is the humble IV solution.

The writer followed cases of food poisoning that occurred in upstate New York in 2012. She noted that hospitals were charging hundreds of dollars just for intravenous fluids in these severely dehydrated patients. While IV solution can be made for less than one dollar per liter, hospitals were billing hundreds for "IV therapy." In particular, a Chinese-American grandmother and her granddaughter were charged $4,000 and billed for $1,400 for their hours of treatment in the emergency room even though they were on Medicaid and should not have received a bill. The author noted that IV fluids for the grandmother cost $787 while the granddaughter's IV fluids cost $393, suggesting the IV solutions cost hundreds of dollars if you assume the labor cost of inserting the IV were equal between the two.

Clearly somebody is making a huge amount of profit from IV fluids. Middlemen that act as distributors for the manufacturers are implicated, as well as hospital profit margins. Unfortunately due to confidentiality agreements there is no way to know for sure who is making off with all the loot. One thing that clearly stood out for me was how little money the doctor is actually making for taking care of sick patients. Medicaid eventually reimbursed the hospital $119 out of $2,168 for the grandmother's portion of the medical bill. It paid the doctor who treated her life threatening illness in the emergency room a paltry $66.50. You read that right. For treating a patient who could have died if not properly tended to, the doctor will get less than $60 per hour from Medicaid.

Do you know how little that is? My children's piano classes cost more than that. The dishwasher repair man who came over for 30 minutes just to tell me that my old dishwasher was dead and I'd need to buy a new one charged $130 for the visit. But for the privilege of slogging through college and medical school, racking up hundreds of thousands of dollars in debt, then working as a slave/resident for several more years only to be paid less than $60 per hour as a doctor is beyond insulting.

Pundits complain that doctors make too much money. The government's formula for calculating SGR projects a further cut to physician payments of 25% next year. Yet how demoralizing it is to make so little as a doctor, with all the hardships that one puts up with, not just for himself but for his entire family, and people still criticize doctors for being "greedy." That level of reimbursement isn't even enough to repay student loan debt much less maintain a practice.

Thanks to Obamacare, payments like this could be the norm very soon. Millions of people are about to be enrolled in the system that is set to pay doctors at Medicaid rates. Even if the government wants to be generous and raise reimbursements 73% to make it equal with Medicare rates, that fix is only good for ONE year according to government legislation. Obamacare has no funding plans for maintaining physician reimbursements at that level after 2014. I think in legalese that is called bait and switch. And doctors got baited really good.