KE Cellars

The high cost of “free.”

Click here to listen to the broadcast of You Tell Me on KTBB AM & FM, Friday, September 04, 2009.

As a good friend of mine, a volunteer football coach and altogether good guy said Wednesday afternoon, “Paul, when you married Lee you out-punted your coverage.”

For those of you who aren’t football fans, suffice to say, that was the highest compliment he could pay my wife.

And he’s right. I married a wonderful woman. For all of my guy friends who complain about how much their wives spend, my problem with my wife is that she squeezes a dollar until George Washington begs for mercy. My wife spends prudently.

Not long ago, she was at an event at which Baylor University Medical Center had set up a mobile mammography unit. The lady at the table said, “Why don’t you get a mammogram today?” My wife thought, “I’ve never had one, I’m old enough to where I should have, I’m here, so why not?”

She reached in her purse and got out a credit card and the lady at the table said, “Oh, don’t worry about that, we’ll bill your insurance company.”

Good news to my dollar-watching wife. From her point of view, a mammogram that day was “free.”

And she got it done and everything is fine.

But then the bill came. It seems that Baylor is an “out-of-network” provider on my health plan and thus declined to pay for any of my wife’s mammogram that day. Baylor wanted $308.

My wife went nuts.

“They should have told me what it cost!,” she fumed. “If I had known it was $300 I probably wouldn’t have done it.”

Now every doctor listening will tell my wife that $300 is a small price to pay for an early diagnosis of breast cancer and they are quite correct. But that’s not the point.

I submit that if everyone that walked up to the table that day had known that the procedure was going to cost $300 out of their pockets, many would have elected to pass. And I believe that if a high percentage of patients were price resistant at $300, the price wouldn’t be $300.

I know that mammography is miraculous technology that cost a lot of money to create. But I also believe that if selling mammograms required getting women to come up with money right out of their purses to pay for one, instead of costing $300, someone would find a way to make money with a mammogram machine at $65 a copy.

I believe that it’s the too frequent illusion that health care is free, driven in large measure by the belief that health insurance is a right born of being employed (itself a distortion created by government policy during World War II), that is a very significant factor in driving up the cost.

Not coming out of your pocket is not the same as free but at the point of transaction it looks and feels like it’s free.

And thus we lose the chastening effect of price sensitivity. And if the customer lacks price sensitivity, you can bet the price is going nowhere but up.

But, Paul, the insurance company will be price-sensitive. They’ll have to pay the claim.

That’s true. But their price-sensitivity is mitigated by a myriad of regulatory and legislative mandates regarding what they must cover whether they want to or not.

And thus premiums that employers pay for employee benefit health insurance gallop ahead at several times the rate of inflation, prices for health care keep going up and our leaders in Washington declare a “crisis” that only a massive intervention of government can solve.

The fact that my wife reached for her credit card suggests that there is a price at which she is willing to accept personal financial responsibility for monitoring her health.

Americans by and large maintain their cars and their homes with money they pay out of their own pockets and there exists no “crisis” requiring a massive government takeover of the car and home repair industries.

And if something truly terrible happens to home or car, most Americans are adequately insured to deal with that calamity.

Call me simplistic, but for the life of me, I cannot understand why this can’t be the case in health care.


  1. Ken Allison says:

    As with so many other high-interest topics these days, the knee-jerk reaction for conservatives to say is that “it” is the government’s fault. True, many of those in office are corrupt with power and largely focus on how to buy enough votes from their constituents to win the next election.
    But, as Franklin said, we have a Republic, “if we can keep it”. Every step of the way down this slope to socialism has been accomplished with at least the tacit approval of “We The People”. Our apathy and inattention at the polls has resulted in our current state of distress. Only when the majority of citizens once again are a religious and moral people and each one accepts personal responsibility to do all in his power to ensure those we elect to represent us are of like standards can this be corrected.
    So many today just can’t be bothered- even in the face of the death of our God-given freedom!
    WAKE UP AMERICA! This battle will have no end because the other side will never capitulate. Merely holding them at bay will require the same committment the signers of the Declaration made: our lives, our fortunes and our sacred honor.

  2. There’s this massive campaign underway on Facebook today. Friends send you this post that says, “No one should die because they cannot afford health care, and no one should go broke because they get sick.” (If you agree, please post this as your status.)

    The problem is that statement is based on a false assumption – at least here in the USA. I don’t know anyone who’s died because they couldn’t afford health care. Many choose to for reasons of pride or because they just don’t want to drag it out or whatever, but if you need help, there is some place to get it here in America.

    You know what, for 30 years now, I’ve worked for charities and nonprofits. I’m broke most of the time. (They don’t call ‘em nonprofits for nothin’). Ironically, if I were a bit poorer, I’d have better health care than I do. I’ve had all sorts of periods where we didn’t have insurance at all. When we started a home-based day care center to be with our kids after school, we were without health insurance for several months. During that time, my wife developed a tumor. I scraped together enough to get her to an OB/GYN. It’s a lot easier when you just pay for things, you don’t need layers of approvals that also have to be paid for. Anyway, we told the doc we couldn’t afford the surgery and didn’t know what we were going to do. The doc said, don’t worry, I do several of these cases every year as my way of giving back a little. He did the surgery for free and the hospital also got us some help to write off the bill because we were in trouble. Nice people.

    If you let them, medical people do that sort of thing. Most got into the medical racket because they wanted to help people. Remember how the old country docs used to work for chickens and bushels of apples and such. They’ve always done that kind of thing. But, if the government runs the system, the docs and hospitals won’t be allowed to take chickens in payment anymore (or even give away services for that matter). Instead you and your tumor just sit and wait till some bureaucrat who doesn’t give a rat’s kneecap about your health decides it’s your turn.

    The government does that by a simple regulation that never was passed by congress. Some bureaucrat decided it ought to be that way because he or she figured that was the legislative intent. The rule goes like this. If you take government reimbursement for a service, you can never charge anyone else less than what you charge the government. In other words, if you give one person services for free, you would then have to give the government those same services for free.

    This rule effectively bans doctors from doing pro bono work and actually makes health care more expensive as a result. Not only that, but it makes it so that if a doctor did do something nice for a patient like not charge for something, and someone ratted him out, he could lose his practice.

    Welcome to the twisted world of health care by bureaucracy!

    So, forgive me if I don’t “pass it along” even though I do believe people ought not die because they can’t afford health care. I think what these well-meaning folks are trying to do to the health care system is a big worthless fraud that’s going to hurt more people than it’s going to ever help. I think more people will die under government run health care than will ever die with what we’ve got now. In fact, if the government would get out of the way, we’d already have the problems solved. That’s what we Americans do (and I don’t count bureaucrats as Americans – I think they must import them all from Uzbekistan or Libya or somewhere like that.)

    Besides, do we really need more bureaucrats telling us what to do?

    We’re trying to go at a problem with a sledge hammer that could better be fixed by loosening a tourniquet.

    Tom King
    Flint, TX

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