Hidden Costs?

A short paper, "Hidden Costs of Health Care," released by Kathleen Sebelius and the Department of HHS last week, cherry picks the data to make a case that "Americans are spending more than ever on their monthly premiums while simultaneously being forced to pay higher out-of-pocket costs as a result of rising deductibles, copayments, and other cost sharing mechanisms." It goes on to complain that out-of-pocket costs, including premiums, rose by 30% from 2001 to 2006. Yet, elsewhere Mr. Obama frequently claims that the cost of employer-sponsored coverage rose 100% in the same time frame, so employees would seem to be getting a good deal.

Sebelius' report also says, "Seventeen percent of people with employer-based coverage have high out-of-pocket burdens (defined as out-of-pocket costs that consume 10 percent or more of a family's total income)." Of course, she forgets to mention that people on Medicare pay on average of 14% of their incomes on out-of-pocket costs, so a "public option" might not solve this particular problem.

She goes on, "The economic burden is even more pronounced for people in the individual market purchasing directly from an insurer.  Total out-of-pocket costs per person (including costs of health care used and premium) have increased by 45 percent from an average of $5,008 in 2001 to $7,280 in 2006." Well, yes, by definition people who buy individual coverage are paying 100% of the cost of their care. There is no one else to pay for it AND they don't even get a tax break on it. But if their costs went up 45% at a time when employer costs went up 100%, they would seem to be doing something right.

Ms. Sebelius seems to think that paying for health care directly is a burden, but paying the taxes to have government pay for your health care would not be a burden.

Comments (4)

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  1. Tom H. says:

    Good point, Greg. We need to keep reminding people every time this argument raises its ugly head. Repeat after me: MEDICARE IS EVEN WORSE!

  2. Bret says:

    Double good point. Paying taxes is worse — much worse — than paying for care.

  3. Bart Ingles says:

    “Hidden Costs of Health Care” describes both the disease and its cause. The obvious cure is to quit hiding the costs so much.

    Higher deductibles and co-pays are merely costs trying to come out of hiding. But Sebelius rails against these symptoms as though they were the disease itself. If she succeeds in hiding the symptoms– forcing the costs back into hiding– she will only make the problem worse.

  4. Tim says:

    “Hidden Cost…” Missed! know one ever speaks about the amount being charged by physicians and hospitals.
    First Deductibles, do the math, a single guy looks at two plans: one has a $500 deductible and the other has a $2500 deductible. The cost difference of these two plans after 12 months, about $2000 more for the $500 deductible plan. Your free to buy either one, I typically reccommend the later. Then, Why are premiums rising? I recently had a simple procedure, a spot removed and tested. Prior to the 15 minute procedure I asked how much would this cost? They couldn’t tell me, but you know they will bill me. I ask you, would you sit in a car at the dealer and drive away not knowing the price? NO, of course not! My daughter had to have a colonoscopy, twice. The first cost $1000 the second was over $1900. Universal Health Care will not fix this, to control cost, we the people, need to demand “How much are you Charging my Insurance company. The insurance company is your partner, get involved, demand to know, ask questions.