Did you know that Medicaid/Medicare will negotiate with each hospital, every two years or so, for how much they will pay for a service?

The problem is that those two government-run entities don’t care what it actually costs to provide that service.

For example, a mammogram. We’ll keep it simple and boil this process down to just the salary of the technician and the cost of the facility. She might get paid $36 an hour. And I’ll say the process takes about an hour and a half from start to finish. That’s $54. The machinery and the room cost might be $20 an hour, so $30 for that, with a grand total of $84 for the mammogram.

Medicaid will tell the hospital they will only reimburse the hospital $30 for each mammogram that it provides! This means the hospital goes in the negative $54 for every patient who gets this done.

Or let’s talk about a heart valve replacement. Maybe the surgeon is paid $150 an hour. If we’re talking about a four-hour surgery, this will cost $600. And his assistant is paid $50 an hour for four hours. That’s another $200. (I have no idea how many assistants there are for these things.) Then let’s say it's about $300 for various supplies (gauze, sponges, anesthetics, gloves, masks, etc. ). Oh, and $100 an hour for the room and its equipment. We’re up to $1,500.

Medicaid says they will only reimburse the hospital $900 for each surgery of this type! This means the hospital goes in the negative $600 for every patient who gets this procedure.

Can you see the pattern of loss here?

Something else to be reminded of here is that Medicaid and Medicare are funded by payroll deductions of people who work and those who are on Social Security. Yes, look for that line item on your pay stub. That is how government-funded insurance is funded; by people who have jobs or are retired. If jobs are gone, so goes this funding.

You should also be aware that these are the same people who also pay for part of their own medical insurance through more payroll deductions. Keep reading.