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Your Apathy, Their Disdain--The Inflated Price of Health Care and Retirement Plan Services

May 23, 2013

On March 4, 2013, Time Magazine published a 36-page article by journalist Steven Brill entitled, “Bitter Pill: Why Medical Bills Are Killing Us!” Brill spent seven months analyzing bills from hospitals, doctors, and pharmacists. He also either interviewed or reviewed the hospital bills of seven uninsured or underinsured individuals and discovered that the health care industry charges whatever it wants.

The gist of the Brill article is that health care prices are inexplicably high. Hospitals are not restricted in what they can charge and they pay their high-level administrators million dollar salaries. Uninsured or underinsured individuals must either pay these high prices or try to negotiate discounts. People with Medicare or comprehensive employer-provided health insurance coverage do not have this problem.

On April 23, 2013, Frontline aired a documentary entitled “The Retirement Gamble.” The correspondent and co-writer of the documentary, Martin Smith, interviewed financial experts in favor of or opposed to the defined contribution model of saving for retirement. He also discussed his retirement planning experience, as well as interviewed ordinary people trying to make sense of their 401(k) style plans.

The gist of “The Retirement Gamble” is how fees charged by mutual fund companies and others erode investment gains. A simplified example: if your investment in a particular fund yields 5% on average and fees associated with the fund average 3%, you effective rate of return is 2%. Until recently, the average employer and employee did not know what, if any, fees they were paying for access to these mutual funds. A majority of people thought they paid no fees at all.

Another prominent theme in the documentary is the role of financial advisors and how they do not specifically have to act in the best interest of their clients by suggesting or offering lower cost investment options.

On May 8, 2013, Medicare released billing information for 100 common inpatient procedures at hospitals all over the country. What the data revealed is that hospitals can charge vastly different rates to perform the same procedure regardless of where the hospital is located. The difference in prices for common medical procedures among hospitals can be 200% to 300% or more.

These three stories have a few things in common, but the overarching message is that the health care and financial services industries are collecting a lot of money from the rest of us, all on their terms. And lately, they have responded to their critics and, by extension, the rest of us, with a healthy level of contempt for daring to mention that we may not be getting our money’s worth. According to them, it is not their responsibility to make sure we have adequate health care or retirement savings. It ours. But there is no denying that they rely on your apathy to allow them to continue to charge whatever fees they want for their services.

  1. Do you use online health care price tools to learn the base cost of common medical services?
  2. Do you request price information before receiving non-emergency health care services?
  3. Do you request discounts on the portion you must pay for medical bills?
  4. Do you know what you pay in fees for your retirement plan?
  5. Have you received and reviewed your retirement plan fee disclosure notice?
  6. Do you participate in actively managed mutual funds that typically charge higher fees than passive funds?

If you answered "no" to most or all of these questions, your disinterest (apathy), is costing you money.
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References:

Smith, Martin, and Marcella Galviria. Frontline: The Retirement Gamble. PBS. 23 April 2013. Television.

Steven, Brill. "Bitter Pill: Why Medical Bills Are Killing US." Time 4 Mar. 2013: n. page.
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