After this season of shopping, we Americans have shown our savvy. We know that steep markdowns are illusory, that the “real” price to the store is a fraction of the retail price, and that the “rock bottom” price, an amalgam of labor and machines and infrastructure, is a fraction of that price. We know that name-brand goods costs more at name-brand stores than on-line.
Yet we do not see the costs of health care with the same savvy.
We cling to comforting myths.
1) “My employer pays for health insurance, or picks up most of the tab.”
The myth reassures us of the magnanimity of our employer, one reason not to tamper with what we have: the stuff of the “Harry and Louise” advertisements aired during the Clinton years, advertisements which scuttled that Administration’s stabs at “reform.” In the furor over any reform that extends Medicare, we hear the same refrain: those fortunate enough to be insured via their workplaces will “lose” that benefit.
Economists point out that “wages and benefits” constitute the cost of labor. Whatever part of the tab an employer picks up comes from the employees’ total wage-package. Your employer may not be Scrooge, but is not a philanthropist, at least not to the company’s workers. Spared the expense of health insurance, the employer might just as readily increase wages.
2) “Medicare is free.”
Medicare is not free. Taxpayers pay for it. So do enrollees. Part A (for hospitals) is financed from the payments made to Social Security. Part B (physicians, therapy, other providers) is financed by premiums. For most enrollees, the government deducts the monthly premiums from Social Security checks. Uncle Sam has shielded enrollees with low incomes, giving some enrollees Medicaid, others (the “qualified beneficiaries”) relief from premiums, co-payments, and/or deductibles. People who buy supplemental policies shield themselves from the co-payments. But they pay a monthly premium for that shield.
As for coverage of drugs, anybody who has waded through the labyrinth of Part D to choose a plan knows that the cost will depend upon the drugs chosen (some plans cover some drugs, no plan covers all drugs) as well as the premium.
Medicare covers everybody age 65 and older, everybody with a major disability, everybody needing renal dialysis. Medicare costs far less to administer than private insurance (no mega-salaries, no profits, no advertising budgets); but it is not free.
3) “Most vaccinations are free.”
The companies manufacturing the vaccines are not doing that pro bono.
For children, (1962 Public Service Act, Section 317; 1983 Vaccines for Children Act) Uncle Sam buys 52% of vaccines; state and local governments, 5%. The private sector buys the rest. Although this Administration wanted to slash funding for children’s vaccines last year, Uncle Sam negotiates well: $15.99 for one dose of MMR vaccines, for instance, versus $34.72 on the private market. Nine states (Florida, Idaho, Maine, New Hampshire, New Mexico, North Dakota Rhode Island, Vermont, and Washington) have universal purchase policies: the state buys all recommended vaccines for all children, including those who are insured.
Uncle Sam also buys vaccines for adults at a discount (shingles’ price $102.90 versus $144.20). And, under the Affordable Care Act, Uncle Sam has ruled that insurers not charge enrollees a co-pay.
But “free” is a misnomer. Consider “free” flu shots. State and local health departments distribute the vaccine to a panoply of settings, including physicians’ offices, pharmacies and heallth clubs. Some pharmacies offer incentives, like gift cards.
Those providers (pharmacies, physicians et al) bill the insurers, whether Medicare, Blue Cross, Aetna, etc. The bills vary. CIGNA paid $47.53 to one physician office in Long Beach, Calif.; $85 to another office in Sacramento. In the Washington metropolitan area, CVS charged CIGNA $32 at a D.C. store, $40 at a Rockville one. Medicaid was a savvier bargainer: it paid $15 per shot in D.C.; $19 in Connecticut. The costs constitute part of the insurers’ total costs. (Kaiser Health waded through insurers’ records to determine charges.)
The enrollee doesn’t see those charges. They fall into the total premium. As for the people without insurance, they generally pay out-of-pocket, from $20 (Costco) to as much as $70 to receive the vaccine. (A group of physicians offered to vaccinate, at no cost, immigrants held in detention centers when the Trump administration refused to pay. Homeland Security rejected the offer.)
Our health care financing system jumbles the payers, private and public, in an accounting fog that obscures the fact that we all, either as patients, taxpayers, or enrollees, pay the humongous tab.
Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email retsinas@verizon.net.
From The Progressive Populist, January 1-15, 2020
Blog | Current Issue | Back Issues | Essays | Links
About the Progressive Populist | How to Subscribe | How to Contact Us