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The Rising Costs of Medical Bills

This year, Americans are likely to spend $2.8 trillion on health care. Of the 2.8 trillion, about $800 billion will be paid by the federal government through the Medicare insurance program for the disabled and those 65 and older and the Medicaid program, which provides for the poor.

The difference will be paid by private insurance companies, those who have no insurance or those who will pay out-of-pocket expenses.

But why are medical bills costing Americans so much?

Time Magazine examined the medical bills of people across the United States, and discovered that many hospitals are requesting unnecessary testing and charging their patients alarmingly high rates for their visits.

One example of the high cost of healthcare in America is Janice S. of Connecticut. She was taken four miles by ambulance to a hospital after experiencing chest pains. After about three hours of tests and a brief encounter with a doctor, she was told she had indigestion and sent home.

Janice S. left the hospital with a bill for $21,000. She has no insurance, and is one year away from qualifying for Medicare. A closer look at the medical bill revealed Janice S. was charged $995 for the ambulance drive, $600 for a doctor to read her test results along with other similar miscellaneous charges.

Doctors have cited a legal incentive to ordering expensive testing. Some are claiming they are ordering more tests to avoid being sued, and avoiding medical malpractice litigation. However, the excessive testing is putting a burden on patients, and it is not a question of how much testing but the performing the right tests.

According to a McKinsey report, health care providers in the United States provide far more CT tests per capita than those in any other country, and Americans also pay a lot more for each tests. The United States has more than 10,000 CT machines in use, up from 3,000 in 1997.

Similar medical bills were discovered all across America, including Emilia Gilbert, who suffered a fracture nose after a slip and fall in 2008, and left the hospital with a $9,418 bill. Gilbert charges included 3 CT scans, a total of $6,538 plus $261 for a doctor to read the results.

With these prices, hospitals, medical supply companies and lab testers are making hundreds of millions in profit. Of New York's 18 largest private employers, eight are hospitals. The country's largest lab tester Quest Diagnostics reported revenues of $7.4 billion in 2012.

In the mean time, 60 percent of all personal bankruptcy filings each year are related to medical bills.

What do the hospitals, most of which are non-profit, do with all the profit?

The hospitals improve and expand facilities, buy more equipment, hire more people, offer more services, buy rival hospitals and then raise executive salaries because their operations have gotten so much larger. All this, despite the fact that the United States has more hospital beds than it can fill.

With Obamacare, it restricts abusive hospital-bill collecting; it forces insurers to provide explanations of their policies in English and requires a more rigorous appeal process conducted by independent entities when insurance coverage is denied.

However, it fails to limit or change the cost of health care.

Some reform is necessary in the shape of profit-margin caps on drugs to set limits of prices or limiting administrator salaries at hospitals, or tightening how much Medicare will spend for CT or MRI tests.

If not, the cost of medical care in the United States will continue to burden the economy.

Source: Time Magazine: "Bitter Pill: Why Medical Bills are Killing Us," Feb. 20, 2013.


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