So, those of you who’ve been following this blog on my web site know that I’ve recently had foot surgery, following the somewhat embarrassing episode of a having a kitchen knife fall on my foot (neatly blade down), and severing the tendon to my big toe.
Today was the 2 week check up day. This is when a junior staff member at the surgeon’s office removes the bandage and I go “Oh My God!!!” - the shock at how a 1 inch cut needing 3 stitches could turn into a 4 inch cut needing 18 stitches took a little while to subside. However, that’s not the point of the story.
No the point (actually, plural, since I have two), came when it became apparent I needed to walk with a boot for another 3-5 weeks, and the surgeon was not impressed with the industrial style one I was given after surgery, so he sent me off to get a more user friendly model (pictured).
This is when the points start to become more clear.
In a previous blog, I discussed how the the least important component in determining the price of an item is how much it costs to make. That point was about to be reinforced very strongly
The lady at the front desk at the prosthetic place was in a great mood, as her son had just called from Dallas, en route to Phoenix airport from a tour in Iraq. It was in this great mood that she advised that my insurance company would probably not cover a second boot, but she was more than happy to check. She checked, and yep, she was right.
So, I asked.... with not a small amount of trepidation... how much would this new, super duper, user friendly boot be???
“$650” she replied. “But (and here’s the point), we sell them for $125 cash.... Yep, the price premium this small prosthetic manufacturer placed on dealing with insurance companies was a whopping 520%!!! Given the amount of time I’ve spent on the phone with my insurance carriers arguing why I think that paying my claims in accordance with their policy is actually OK, 520% does not seem unreasonable.
Even though the thing came with air bags, and is amazingly more comfortable than the thing they gave me at the hospital, I estimate the actual cost to manufacture at around $50.00. Needless to say, I paid the $125 cash. The benefit of avoiding dealing with my insurance carrier was worth every cent...
Which of course gets to my second point. As someone who has lived in countries where basic medical care is the responsibility of government, I’ve always struggled with fact that in the most (well, until recently) affluent country on the planet, people die of easily treatable ailments, because they can’t afford either the care, or the insurance to fund the care, they need
I might be able to accept this if privatizing the health system led to efficiencies that one tends to see in the free market. But a quick comparison of my effective tax rate (calculated by adding up what I pay in federal tax, state tax, and health insurance) against what I paid in the industrial backwash of New Zealand shows that is simply not true. That fact is even more astounding when you consider that New Zealand only has 4 Million people upon which to spread the cost of health care (and no, they don’t tax the sheep).
The reason for this is, of course, the huge amount of cost that gets added into the system by pricing methods like the one I encountered today. The next time you wonder why your health insurance premiums go up, and the coverage goes down, ask your carrier how much they pay for a short cam boot. If its more than $150.00, give them my name, I’ll sell them one for $149.
Dave
Today was the 2 week check up day. This is when a junior staff member at the surgeon’s office removes the bandage and I go “Oh My God!!!” - the shock at how a 1 inch cut needing 3 stitches could turn into a 4 inch cut needing 18 stitches took a little while to subside. However, that’s not the point of the story.
No the point (actually, plural, since I have two), came when it became apparent I needed to walk with a boot for another 3-5 weeks, and the surgeon was not impressed with the industrial style one I was given after surgery, so he sent me off to get a more user friendly model (pictured).
This is when the points start to become more clear.
In a previous blog, I discussed how the the least important component in determining the price of an item is how much it costs to make. That point was about to be reinforced very strongly
The lady at the front desk at the prosthetic place was in a great mood, as her son had just called from Dallas, en route to Phoenix airport from a tour in Iraq. It was in this great mood that she advised that my insurance company would probably not cover a second boot, but she was more than happy to check. She checked, and yep, she was right.
So, I asked.... with not a small amount of trepidation... how much would this new, super duper, user friendly boot be???
“$650” she replied. “But (and here’s the point), we sell them for $125 cash.... Yep, the price premium this small prosthetic manufacturer placed on dealing with insurance companies was a whopping 520%!!! Given the amount of time I’ve spent on the phone with my insurance carriers arguing why I think that paying my claims in accordance with their policy is actually OK, 520% does not seem unreasonable.
Even though the thing came with air bags, and is amazingly more comfortable than the thing they gave me at the hospital, I estimate the actual cost to manufacture at around $50.00. Needless to say, I paid the $125 cash. The benefit of avoiding dealing with my insurance carrier was worth every cent...
Which of course gets to my second point. As someone who has lived in countries where basic medical care is the responsibility of government, I’ve always struggled with fact that in the most (well, until recently) affluent country on the planet, people die of easily treatable ailments, because they can’t afford either the care, or the insurance to fund the care, they need
I might be able to accept this if privatizing the health system led to efficiencies that one tends to see in the free market. But a quick comparison of my effective tax rate (calculated by adding up what I pay in federal tax, state tax, and health insurance) against what I paid in the industrial backwash of New Zealand shows that is simply not true. That fact is even more astounding when you consider that New Zealand only has 4 Million people upon which to spread the cost of health care (and no, they don’t tax the sheep).
The reason for this is, of course, the huge amount of cost that gets added into the system by pricing methods like the one I encountered today. The next time you wonder why your health insurance premiums go up, and the coverage goes down, ask your carrier how much they pay for a short cam boot. If its more than $150.00, give them my name, I’ll sell them one for $149.
Dave
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