The dysfunction of the American health care system is on full display in the way we organize and finance childbirth. This is the only conclusion to be drawn from an article in The New York Times showing that the inflated costs charged for each specific item and service add up to a total vastly exceeding the costs charged in other developed nations. At the same time, rates of infant mortality and maternal death are higher in the United States than in other developed nations.
Some of the figures contained in the article are startling. Between 2004 and 2010 the prices paid by insurers for childbirth rose between 41 and 49 percent. Average out-of-pocket expenses quadrupled.
Actual insurance payments in the United States for 2012 averaged $9,775, compared to $3,541 in France and $2,641 in Britain. For Caesarean deliveries the U.S. payments were $15,041. The payments in France were $6,441, and in Britain $4,435. These payments represented a discounted price negotiated by insurance companies. The list prices are much higher, and patients whose coverage lacks maternity care often face charges of many thousands of dollars.
The reason for the skyrocketing costs of care is the way that services are delivered, with high charges for each ultrasound or lab test. Each procedure is billed at a high cost. The Times story mentions $20 for a “splash” of gentian violet as a disinfectant on the umbilical cord. The cost at Walgreen’s was $2.59. A doctor quoted a price of $265 for a fetal heart scan, but when the mother received her bill, the cost was $2,775. (She challenged the bill and won.)
Hospitals say they charge high above the actual cost of products such as gentian violet in order to make up for their overall costs. But patients who receive bills with inflated prices for each separate procedure or product face a highly inflated total, and the system as a whole — what we pay in our insurance premiums and in the taxes that go to government programs such as Medicaid — is burdened with highly inflated overall costs. The 4 million births in the United States cost a total of about $50 billion, or about $12,500 per birth.
These realities come to light at a time of major change in health care. Last week Rutland Regional Medical Center announced that federal budget cuts are forcing new layoffs at the hospital. Federal sequestration and fiscal cliff cuts have reduced reimbursement rates for the hospital. Thomas Huebner, hospital president, said that reduction in demand for some inpatient services, along with the federal cuts, mean a loss of the equivalent of 100 full-time positions. At the same time the hospital is adding jobs for its new psychiatric unit and an ear, nose and throat program and will add more for its addiction recovery center.
In health care flux will rule the day for the foreseeable future. Pressure should mount to offer prenatal, childbirth and newborn care as part of a package whose costs are scaled back to realistic levels. Greater reliance on midwife services could reduce costs. Also, greater awareness of comparative costs ought to help hospitals curb exorbitant charges. It is well known that some hospitals provide a much higher percentage of C-sections than others do, for no apparent reason, adding to the costs of childbirth.
At the same time, Obamacare soon will provide health care coverage to millions of people who lack it. Hospitals and other providers will be treating people who previously did not have access to good quality care. Thus, RRMC may be reducing its service in response to reduced demand in some areas and expanding its service in areas where resources are being deployed for the first time.
Ultimately, containing costs in health care will mean scaling back exorbitant payments. Some people will be getting less money, or at least the growth in their income will slow. The test will be to ensure that the money goes to providing high-quality care rather than to expensive and redundant or unnecessary tests and procedures. Hospitals should not have an incentive to be wasteful.
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