Regular unleaded is pumping for less than $2 a gallon, so a lot of amateur economists are asking why folks aren’t spending their newfound gasoline savings at the shopping malls.
I’ll tell you why.
Part of the answer just came in the mail. It’s a medical bill. Once you hit retirement age, the mailbox starts filling with the damned things. Not just bills for regular checkups but big ones for fixing stuff that happens when you get old, like repairing abdominal hernias and removing vision-stealing cataracts.
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That latter procedure — removing the clouded-over lens from your eye and replacing it with a clear synthetic one — is one of the most common surgeries. It’s a walk-in, walk-out deal that takes an ophthalmic surgeon about 20 minutes.
So I blanched when I got a bill showing the hospital was charging $13,197.25 for hosting the procedure. That’s not including fees for the anesthesiologist or the surgeon, which, by comparison, seemed reasonable.
So $13,197.25 for what? Sure, they prepped me in a one-bed room with an overhead TV, gave me a slit-backed johnny to wear and laid me in a wheeled gurney for easy transport to the OR. Sure, they took my vital signs and started an IV line for delivery of the sleepy drip. And yeah, the nurses were attentive and pleasantly chatty. But not $13,197.25 worth.
Please tell me it wasn’t the socks. You know, the gray cotton demi-peds that come in a hermetically sealed plastic bag, the ones you get to take home even though they don’t fit and have traction treads on both sides so you don’t know which is right or left, up or down.
Granted, our insurance carrier doesn’t pay the sticker price, but some discounted amount pre-negotiated with the hospital chain. But some folks are forced to pay retail — the uninsured, for example, which helps explain why outsized medical bills are the leading cause of personal bankruptcies in the U.S. Whatever amount the hospital doesn’t collect, moreover, it can count toward its “unreimbursed” expenses — a figure hospital administrators can wave like a bloody shirt when it’s time to renegotiate with insurers or renew their nonprofit tax exemptions.
So what does this have to do with the impact falling gas prices were supposed to have on the economy? Plenty, because whatever Americans have been saving at the pump is being more than gobbled up by increases in medical insurance premiums, deductibles and copays.
We’re being told that insurance premium increases have slowed to an average of 5 percent per year since 2005, down from 11 percent annually from 1999 to 2005.
But according to the Kaiser Family Foundation’s annual survey, a big factor behind slowed premium growth has been a whopping 67 percent increase in deductibles since 2010. That’s about seven times the rise in both workers’ wages and general inflation.
Much has been written about America’s stagnant wages and shrinking middle class. But ask yourself: How many employers can afford to hand out adequate raises when the average health insurance premium for family coverage climbed last year to $17,545 … of which workers are asked to pick up “only” $4,955?
Naturally Republicans blame President Barack Obama and the Affordable Care Act for rising costs, conveniently forgetting they argued against even minimal price controls before walking away entirely. Or that this spiking of medical costs began long before Obamacare.
No, what we’re looking at here — lately seen most clearly in pharmaceutical pricing — is an industry whose pricing model has shifted to what the market will bear, not what stuff actually costs or what consumers can reasonably afford. Our complex insurance system obscures this gouging so workers don’t make the connection about why their pay has flatlined. Or worse, why their company has replaced them with robots that don’t get sick … or moved their jobs overseas where companies aren’t expected to insure.
So please, you economic pundits, quit asking where those extra dollars are going now that we’re paying less for gas. Stop pointing to that $1.99 sign for gasoline so I can show you my $13,197.25 pair of hospital socks.
John McCarron teaches, consults and writes on urban affairs.