The lunacy of US health care

A quick departure from the usual themes of this blog today, as I have an interesting anecdote illustrating the financial folly of the US healthcare system. A couple of months ago I went to see a doctor in Manhattan about a minor skin problem. She spent about 10 seconds examining me, immediately identified the problem, wrote me an illegible prescription, and sent me packing. At the most I was in her office for 2 minutes.

Two months later I get a strange letter in the mail from the clinic, telling me that my insurance company is refusing to pay them the $160 they charged me for that 2 minute appointment. Here is what it says.

To date, we have been unable to secure payment for the services rendered to you. We appreciate any assistance you can provide, including calling your insurance company, to help get these claims paid. We appreciate your assistance in resolving your outstanding insurance balance.

This is a perfect illustration of how completely nuts the US healthcare system is. Firstly, $160 for a two minute office visit. Enough said.

Secondly, it appears to be routine business practice of a lot of the health insurers here to deny a certain percentage of claims, whether or not they have a genuine reason for doing so. Patients are then forced into an endless bureaucratic nightmare of paperwork, fine print and phone calls and have to waste hours negotiating with their insurance provider to get them to pay the bill. Some people just give up eventually and end up paying the bill themselves, which is probably what the insurance company was hoping for in the first place. There appears to be no government regulation to put a stop to this kind of stupidity.

Now, my example is nothing more than an annoyance. But there are legions of stories here of cancer victims, etc, being denied coverage for totally arbitrary reasons and then being stuck with enormous bills for services which they thought they were covered for. If you think I'm exaggerating, see here for some heartbreaking stories. In fact, the inability to pay medical bills is the leading cause of personal bankruptcy in the United States.

As the entertaining Matt Taibbi of Rolling Stone puts it:

The system doesn't work for anyone. It cheats patients and leaves them to die, denies insurance to 47 million Americans, forces hospitals to spend billions haggling over claims, and systematically bleeds and harasses doctors with the specter of catastrophic litigation.

There are currently more than 1,300 private insurers in this country, forcing doctors to fill out different forms and follow different reimbursement procedures for each and every one. This drowns medical facilities in idiotic paperwork and jacks up prices: Nearly a third of all health care costs in America are associated with wasteful administration. Fully $350 billion a year could be saved on paperwork alone if the U.S. went to a single-payer system...

President Obama passed a modest reform package last year that attempts to deal with some of these issues, but would still fall well short of the kind of comprehensive health care systems that most other western countries have in place. For this, he has been derided as a "socialist" and a "nazi" by the crazed tea party types currently gaining prominence in the Republican party, who assert that health care is "not a right, it's a privilege".

Anyway, my rant on US health care is over.

Happy new year to everybody reading. If you're new, the aim of this blog is to debate some of the big issues facing Australia's economy today, many of which are getting very short thrift in the Australian media.

To date, I have focused largely on what I think is the biggest vulnerability we face today: the huge rise in Australian property prices over the past decade and the unsustainable growth in household debt that has accompanied it. I will probably continue to go on about this like a broken record, because it is the single issue where I think mainstream Australian opinion (reflected in the media) is the most utterly divorced from reality. But I would also like to broaden the themes of this blog a bit this year.

Some interesting topics that I will probably explore:

• Is China's boom and the massive rise in commodity prices sustainable? 
• Is it sensible to tax the miners with a resources tax?
• Are we going to see sovereign defaults in Europe? And what would trouble in the international debt markets mean for Australia's banks and our property market?
• Why were the Henry review's recommendations on property taxes completely ignored?
• How overvalued is the Australian dollar?
• What is going on inside the head of Brendan Fevola?

Feel free to suggest related topics or weigh in with your own opinion in the comments section below the posts. Time permitting (I do have a full time job!), I will try to reply. I don't expect everybody to agree with me. If you work in real estate, you will probably think I'm an idiot. That's fine. In my opinion, the mark of a good blog is the quality of the comments section.

Until next time.