Saturday, May 13, 2006

Why medical premiums are skyrocketing

I recently received the statement below for some lab tests that were run on me. I was astonished to see a total of $715 for just the routine tests, because I worked for a clinical lab until 1989, where I was quite familiar with the pricing of such routine tests:


Working from memory, I estimated (liberally) that my bill at my old lab would have been approximately $75 for this routine lab work (but would have included more tests), while there would have been no charge for the blood draw. Converting 1989 dollars, I arrive at a figure of about $121 in today’s dollars.

After accounting for inflation, this is nearly a 6-times increase, for fewer tests!

Seeking to compare my lab facility (UCSF) with another, I obtained another statement for similar (but more complete) testing from a friend, and lo, her testing done in the preceding month was billed at a total of $48, albeit in Arizona, but in a private laboratory:


This is nearly a 15-times difference in price, for identical lab tests done just one month apart!

All of the itemized metabolic (AKA: chem panel; SMAC-25) tests on my bill are done in one pass through an automated blood chemistry analyzer, which produces a print-out of the entire panel. Knowing this, I asked my doctor to instead run the panel and was told “we don’t do panels; we only order the tests we need because we don’t believe in unnecessary testing.” Well you can bet that we will have a conversation about this issue at our next meeting...

I am fortunate enough to have good medical insurance that will pay this bill in my stead. But if I were one of the 45 million (or more) uninsured Americans, I would be expected to pay $715 for tests that should cost $48-121 at most. This is highway robbery!

Even those of us who are lucky enough to be insured by our employers are paying for these charges through our labor though, because all employers factor benefits into their total compensation costs. In fact, I have experienced a pay cut over the past two years in large part because of increasing medical premium costs.

Meanwhile, the populace is up in arms about price gouging being done by the oil companies, while their increases come nowhere near the 6-15 times increase being charged for these routine medical lab tests. Who is it again that should be subject to an excess profits tax?

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