Growing disparity in health care costs
TEXT OF INTERVIEW
Steve Chiotakis: Today’s the anniversary of the collapse of Lehman Brothers, when the financial crisis really got started. And later today, President Obama will speak on Wall Street about what his administration has done to solve the crisis so far, and what else needs to be done.
You can be sure health care reform will be on the president’s agenda today as well. Mr. Obama says he’s confident Congress will pass, in his words, “a good health care bill.” Much of the reform effort centers around the growing cost of health care, and some big disparities in who pays how much.
Fortune Magazine’s Allan Sloan is with us on the line. He joins us to talk about the current price structure.
Good morning, Allan.
Allan Sloan: Good morning, Steve.
Chiotakis: So why is the cost of health care increasing at this rate that’s so much higher than inflation?
Sloan: Because the population is shifting to more and more old people, almost all of whom have Medicare. So they all get treatment.
Chiotakis: You know — and I think about this — when we talk about billions and trillions of dollars for health care, it really boils down to how much you and I pay, right? Or how much the insurance company pays on our behalf. But some people don’t have insurance.
Sloan: That’s right — the people who don’t have insurance, Heaven help them. Because the difference between the retail rate and the wholesale rate, which is what insurance companies pay and those of us who have insurance effectively pay, a huge, huge difference. God help you if you have to pay retail.
Chiotakis: And how do the insurance companies put these deals together with the hospitals and the medical companies?
Sloan: Well, I can give you an example involving me. I, last year, had a cardiac stent put in at one of the largest hospitals in New Jersey. My bill comes in, it’s $37,190. And my insurance company is one of the biggest insurance companies in the United States, and they had long since bargained a rate with the hospital. Between us, the insurance company — now I got an 80 percent discount. And if I’d just walked in without insurance, I’m sure the hospital would have pursued me to the ends of the Earth for $37,190
Chiotakis: So Allan, is all of this fixable?
Sloan: Well, it’s fixable. For people who are trying to buy individual policies, they need really to be part of a group to bargain a rate with a hospital. This is the system we have, and it’s definitely fixable, but someone has to decide to fix it instead of running around and shrieking, which has been the health care debate on both sides as far as I can see.
Chiotakis: All right. Fortune Magazine’s Allan Sloan joining us. Allan, thanks.
Sloan: You’re welcome, Steve.
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