Penny-Wise, Pound-Foolish

If you pay attention to all the noise about health care costs and health care spending you’re aware that a lot of the money that we collectively spend on health care is for care for a relatively small number of people suffering from a relatively small number of medical conditions.

One of those conditions is diabetes.  The American Diabetes Association estimates that health care costs for people with diabetes are 2.3 times greater than for those of us without diabetes and overall U.S. spending for diabetes in 2017 was about $237 billion for about 29 million people who have diabetes.

$237 billion.

In addition to this direct spending is another $90 billion in “lost productivity” associated with people with diabetes.  The Curmudgeon has long been suspicious of  those lost productivity figures – we’re supposed to believe someone actually sat down and computed lost productivity in workplaces because of company NCAA tournament bracket pools? – so let’s ignore that and just think about annual spending on diabetes as $237 billion.

A lot of organizations try to do things to help people with diabetes.  The key is keeping such people out of the hospital: out of the ER and out of hospital beds.  That’s where the costs really add up.  Professionally, The Curmudgeon has long been familiar with Medicaid HMOs that spend a lot of money to help their diabetic members take care of themselves and stay out of the hospital.  That’s only natural:  it’s in their best financial interest to keep their members out of the hospital because that’s where these HMOs spend most of their money.  You sure can’t count on hospitals to do this: hospitals are places where health care providers deliver health care services and as far as they’re concerned, the more patients, the better.  Hospitals are in the business of making sick and injured people better; helping people avoid illness and avoid injuries is not something they want to do because it hurts their bottom line, which is all that really matters to hospitals.

So you’d think health insurers would be falling all over themselves to get their diabetic patients enrolled in diabetes education programs, right?

Think again.

The Curmudgeon was surprised to read in the Philadelphia Inquirer a while back about a man who was diagnosed with diabetes and decided to try to take control of his condition by enrolling in a diabetes management course at his local hospital in Georgia.

Perhaps naively, he never inquired about the cost of the program, so he was gob-smacked when he opened up an envelope one day and found a bill for the course he had just completed.


For two half-day sessions in a hospital conference room.


A Johns Hopkins professor of health policy and management explained that

If you can get 25 in the class and charge $500 each, you can make a lot of money.

Nice, huh?

In addition, offering such classes, he pointed out, brings “…people into the hospital that they expect will need the hospital in the future.”

Because that’s what hospitals are all about:  making money, not helping people.

So the guy in Georgia turned to his health insurer for help – one of those Blue Cross plans The Curmudgeon has written about in the past.  (See here,here,here,here, and here.)

And the Blue Cross plan proudly told the fellow that its negotiated price with the hospital for the class was $626.

But because the guy hadn’t met his deductible, he was out of luck:  his insurer wouldn’t help and he was on the hook for the $626.

You have to wonder:  hospitals have no shame and that’s unlikely to change, but why wasn’t the insurer falling all over itself to help this guy?  Why did he have to take the initiative to find a class at all?  Why didn’t the insurance company go to him immediately after the diagnosis and encourage him to take a free class?  The insurer has an enormous financial stake in making sure its newly diagnosed member knows how to take care of himself and keep himself out of the hospital, but the insurer doesn’t offer such a program itself and really didn’t push the hospital for a decent price.

But that’s the American health care system today:  hospitals and insurers are all about making money, even if some of their decisions are penny-wise, pound-foolish, and they’re all about doing so at the expense of the people they are supposedly in business to serve.


Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: