NCPA - National Center for Policy Analysis


March 23, 2009

We could go a long way towards fixing our health care cost burden by requiring that providers charge the exact same price for a procedure, regardless of who is paying for it.  Insurance companies force prices down for members of their groups, but private pay patients pay lots more, says the Minneapolis Star-Tribune.

Take for example, the mighty Mayo Clinic with its gold-plated brand name, heavyweight donors and wealthy foreign patients.  It barely broke even in 2008:

  • While patient numbers held steady, income from patient care tumbled by a third and Medicare was a driving force in the decline; it almost always reimburses much less than private insurers.
  • For Mayo's three locations in Rochester, Arizona and Florida, government-insured patients comprised about 44 percent of patients and 33 percent of patient net revenue in 2007.
  • Total number of Medicare patients seen at Mayo's three main locations in 2008: 179,000.
  • The cost of doing a hip replacement vs. the amount Medicare pays (dollars lost): $3,800 per hip replacement.

However, Mayo's financial health was far better than most health-care institutions, says the Star-Tribune.  For many others, 2008 was a disaster -- a year in which the triple whammy of high-deductible health insurance, sharp declines in medical centers' investment portfolios and soaring numbers of people who lost their jobs and their health insurance delivered a staggering blow to an industry once thought recession-proof.

In this grim mix, overhauling Medicare becomes more of an issue than ever.  Simply spending more on this $432 billion-a-year entitlement program is not an option.  Medicare costs already comprise a disturbing chunk of the nation's gross domestic product.  Medicare's antiquated payment system needs restructuring, says the Star-Tribune.

Source: Editorial, "An alarming symptom at Mayo," Minneapolis Star-Tribune, March 22, 2009.

For text: 


Browse more articles on Health Issues