Why health care costs are out of control

Ok, here are the details: If a medical procedure COSTS $1500 and a hospital performs 100 per year, it must collect $150,000 per year from patients for that procedure. If insurance and medicare reimburse the hospital at less than 100% of the cost, those patients that pay out of pocket must pick up the difference. The table shows a hypothetical process where the procedure cost goes up 2.5% per year, and 1% of the patients move from private insurance to medicare each year. Further, although I do not know the exact dates or amounts, I have estimated the reimbursement rates to illustrate the impact of their change on the out of pocket cost. Over the last 35 years, the numbers show why our costs have gotten out of control.

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year	Procedure cost		Insurance coverage				Medicare coverage				number of procedures	Cash cost
			Reimb rate	Reimb	% of proc	# of proc	Reimb rate	Reimb	% of proc	# of proc
1975	1500.00		0.98	1470.00	0.75	75	0.95	1425.00	0.20	20	100	2250.00
1976	1537.50		0.98	1506.75	0.74	74	0.95	1460.63	0.21	21	100	2315.47
1977	1575.94		0.98	1544.42	0.73	73	0.95	1497.14	0.22	22	100	2382.82
1978	1615.34		0.98	1583.03	0.72	72	0.91	1469.96	0.23	23	100	2749.30
1979	1655.72		0.98	1622.60	0.71	71	0.91	1506.70	0.24	24	100	2841.21
1980	1697.11		0.96	1629.23	0.70	70	0.91	1544.37	0.25	25	100	3411.20
1981	1739.54		0.96	1669.96	0.69	69	0.91	1582.98	0.26	26	100	3513.87
1982	1783.03		0.96	1711.71	0.68	68	0.91	1622.56	0.27	27	100	3619.55
1983	1827.60		0.96	1754.50	0.67	67	0.85	1553.46	0.28	28	100	4342.39
1984	1873.29		0.96	1798.36	0.66	66	0.85	1592.30	0.29	29	100	4492.16
1985	1920.13		0.96	1843.32	0.65	65	0.85	1632.11	0.30	30	100	4646.71
1986	1968.13		0.96	1889.40	0.64	64	0.85	1672.91	0.31	31	100	4806.17
1987	2017.33		0.96	1936.64	0.63	63	0.85	1714.73	0.32	32	100	4970.71
1988	2067.77		0.96	1985.06	0.62	62	0.85	1757.60	0.33	33	100	5140.47
1989	2119.46		0.96	2034.68	0.61	61	0.85	1801.54	0.34	34	100	5315.61
1990	2172.45		0.94	2042.10	0.60	60	0.75	1629.34	0.35	35	100	7538.39
1991	2226.76		0.94	2093.15	0.59	59	0.75	1670.07	0.36	36	100	7811.47
1992	2282.43		0.94	2145.48	0.58	58	0.75	1711.82	0.37	37	100	8093.49
1993	2339.49		0.94	2199.12	0.57	57	0.75	1754.62	0.38	38	100	8384.73
1994	2397.98		0.94	2254.10	0.56	56	0.75	1798.48	0.39	39	100	8685.47
1995	2457.92		0.94	2310.45	0.55	55	0.75	1843.44	0.40	40	100	8996.00
1996	2519.37		0.94	2368.21	0.54	53	0.68	1713.17	0.41	41	100	9363.67
1997	2582.36		0.94	2427.42	0.53	52	0.68	1756.00	0.42	42	100	9709.66
1998	2646.92		0.94	2488.10	0.52	51	0.68	1799.90	0.43	43	100	10067.10
1999	2713.09		0.94	2550.30	0.51	50	0.68	1844.90	0.44	44	100	10436.35
2000	2780.92		0.90	2502.82	0.50	49	0.68	1891.02	0.45	45	100	11726.20
2001	2850.44		0.90	2565.40	0.49	48	0.68	1938.30	0.46	46	100	12123.87
2002	2921.70		0.90	2629.53	0.48	47	0.65	1899.11	0.47	47	100	13220.69
2003	2994.74		0.90	2695.27	0.47	46	0.65	1946.58	0.48	48	100	13675.99
2004	3069.61		0.90	2762.65	0.46	45	0.65	1995.25	0.49	49	100	14145.79
2005	3146.35		0.90	2831.72	0.45	44	0.65	2045.13	0.50	50	100	14630.53
2006	3225.01		0.90	2902.51	0.44	43	0.65	2096.26	0.51	51	100	15130.67
2007	3305.64		0.90	2975.07	0.43	42	0.65	2148.66	0.52	52	100	15646.67
2008	3388.28		0.90	3049.45	0.42	41	0.65	2202.38	0.53	53	100	16179.02
2009	3472.98		0.90	3125.68	0.41	40	0.60	2083.79	0.54	54	100	18291.04
2010	3559.81		0.89	3168.23	0.40	39	0.60	2135.88	0.55	55	100	19157.70

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