A couple weeks ago, a medical fellow at Emory University posted a tweet after three patients came in with Groupon coupons for chest CT scans.
In the space of one Twitter post, she goes from shock that anyone would use a coupon for a medical test, to realizing the patients got a really good deal, and that the cost was likely less than it would have been had they used insurance.
Then she concludes by saying, “US healthcare is bonkers.”
Saw 3 pts in clinic for abnormal chest CTs BOUGHT ON GROUPON.— Nicole Herbst (@NicoleHerbst2) August 25, 2019
Evolution of my thoughts:
-What the $@&#? (*Google it*)
-hm actually priced pretty reasonably 🤔
-jeez if I ever need testing I’m going w/ Groupon, prob cheaper than insurance 🤷♀️
US healthcare is bonkers
Bonkers is right. But not for the reason Dr. Nicole Herbst probably thinks.
What’s bonkers about the nation’s health care system isn’t that some people are using coupons for medical tests. What’s bonkers is that the practice is so rare.
In what other corner of life — other than health care — would anyone be surprised to learn that consumers are shopping around? People shop around for other necessities, such as food, water, and shelter. Why not health care?
After her shock wears off, even Dr. Herbst realizes that the patients coming in with Groupon coupons were getting really good deals. Indeed, they are. A patient in Oklahoma City can use Groupon to get a heart scan — which would normally cost $640 — for just $54. In Atlanta, a heart scan with a consultation is just $25.
Dr. Herbst even comes to realize that using Groupon could be “cheaper than insurance.”
Yet having to pay for health care is routinely treated as a moral failing of the country — even if it’s just to see a doctor, or get an x-ray, or fill a $20 prescription.
CNBC ran a story just last week bemoaning the fact that people sometimes put off seeing a doctor to save money, with the scary headline, “High medical costs have driven these people to put their health at risk.”
What was the crisis? That a third of those surveyed said they had at some point in the past “delayed seeking medical help with hopes the condition will subside.” It also found that 27% had “considered” not seeking care to “avoid high deductibles.”
That’s hardly a problem, let alone a crisis. A large portion of those who saved money by putting off seeing a doctor probably did see their conditions subside. And “considering” not seeking care is different from actually not seeking care.
But what apparently hasn’t occurred to Dr. Herbst, or the reporters and editors at CNBC, or most health care “experts,” is to ask the question: Why is shopping around for health care so rare? The survey cited by that CNBC article notes that only 27% said they’d ever shopped around for a better price on prescription drugs.
Why wasn’t that the headline?
Had any of these folks bothered to explore this question, they’d learn that massive federal subsidies created a culture in which people who willingly shell out $10 for a cup of coffee feel aggrieved about paying anything at all to get a medical test.
It wasn’t always like this. In 1960, half of the nation’s medical bills were paid out of pocket. Outside of hospital visits, insurance didn’t cover routine care. Patients paid doctors in cash for checkups and routine tests.
Today, only 10% of health costs are paid directly by consumers buying products or services. That share is expected to steadily decline.
Why the dramatic shift? First was the enactment of Medicare and Medicaid in 1965, which now pick up most if not all medical costs for seniors and the poor. These two programs alone account for 37% of all health spending.
Federal tax policy accounts for much of the rest of the shift away from out-of-pocket spending. Under current law — which is an artifact of World War II-era wage and price controls — the entire cost of employee health care benefits is exempt from taxes. This amounts to a $280 billion annual subsidy for employer-provided health insurance.
As a result, health bills paid by employer plans are tax exempt. But any care paid for out of pocket had to use after-tax dollars. Is it any surprise that employer plans got increasingly generous, covering even routine bills?
Is it any surprise, either, that consumers lost interest in shopping around? Why bother, if the government or an insurance company ends up being the main beneficiary of their frugality?
It’s worth noting that at 10%, the out-of-pocket share of health spending is lower in the U.S. than in almost every other country that has declared medical care a “right” and promises “universal coverage.”
In Finland, they pay 20% of health care costs out of pocket. The Swedes and Norwegians pay 15%. In Denmark, it’s 14%. Canadians pay 15% of their health costs out of pocket. Even in communist China, people have to pay more than 30% of health costs out of pocket.
What’s needed isn’t less out-of-pocket spending for health care, but more of it. In every other part of the market, choice and competition drive down prices and increase quality. The same would work in health care, if government policies would stop discouraging it.
When doctors’ offices are full of Groupon-wielding patients, the health care system will no longer be “bonkers.” It will be reformed.
— Written by John Merline
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