Maggie's Farm

Dr. Rich's explanation is true, but I believe he would also agree that the cost of money is also a factor in healthcare costs.

How long does a healthcare provider have to wait for payment from the health insurance underwriter? My wife's recent bout with breast cancer afforded me the opportunity to make some first hand observations. If the bill was less than $1000 it was usually handled within 45 days. But during cancer treatment there are very few charges that don't exceed that amount. And payment of those usually requires the provider to forward "progress notes, test results, and treatment prognosis" before they are paid 60-90 days later.

So the doctor, hospital, lab, etc, are going to expend dollars to provide treatment and then have to wait for 3 months to get paid. Healthcare is just like any other business, so they are going to charge interest on these expenditures by inflating the costs.

However, the insurer is making money by delaying payment as long as possible in order to make interest on premiums received, and/or not pay interest on money borrowed to pay claims. It’s a vicious cycle that drives costs higher and higher.

All these factors add inefficiency to the process as every level and contribute to higher healthcare costs. But thinking that government healthcare is the answer is naive - just look at the shape social security and medicare/medicaid are in.