A Personal Take on Health Care Billing
How come it’s cheaper to be uninsured? This story follows both a post from Matthew Holt’s The Health Care Blog as well as my own ER adventure; the gist of Holt’s posted story is this:
- Woman has high deductible health insurance policy (these are common among “health savings plans” and “consumer-directed health care” that the current administration supports). This means she has to pay $X before her insurance kicks in.
- Woman has earache.
- Woman wants to get better, so she goes to a local urgent care clinic; she doesn’t want to wait several days to see her primary doctor.
- Woman shows her ID card, pays a $50 copay, sees a nurse practitioner for 10 minutes.
- 120 days later, she finds an “unpaid” bill for $325 in her mailbox; she calls the clinic and finds out had she just walked in uninsured, it would have cost her $125.
My own ER experience was just as shocking–but less expensive for me. I was sick sick sick back in December, and I went to the Emergency Department for some rehydration and some help with my vomiting. I hung out in a room for 4 hours, where I got an IV placed, received 2 liters of normal saline (that’s 2 quarts of salt water), 1 dose of IV phenergan, and one dose of IV reglan. As you can see from the bill, that’s quite a price hike for the two medications and the saline; you can also see a lab charge that I’m disputing (even though I don’t have to pay it). Most mind-boggling to me is a $5,500+ charge for 4 hours in the ER.
So where does all this lead us? Luckily it leads me to a $50 copay, which I’m happy to pay (and even happier that I have the money to pay it). But I think both of these cases illustrate the disconnect between cost and service. The bill also shows an insurance “adjustment” of $4,000+; does that mean that the insurance company bargained the price down to just over $1700 for me? Could I have bargained down that rate if I was uninsured? Or would I be stuck paying over $6,000?
The story of the woman’s charges also highlight a gaping hole in the high-deductible health plan market, too. Often, like in the new Massachusetts plan, health insurance is compared to car insurance–namely, that everyone “has to have it,” and by requiring it, we can eliminate the problems of the uninsured. But with car insurance, the price of repairs doesn’t change based on if I file a claim or not. If I have a minor fender bender, I can see how much it will cost to repair, and figure if it’s worth reporting to my insurance company, or worth just paying out of pocket for. I may have a higher insurance premium if I report it, but at least it’ll be paid for. (Also, to my knowledge there aren’t “in-network” providers of car repairs; you go to anyone in your neighborhood.)
The common conclusion to all this confusion, time and time again, is that these charges for services are artificially high. Because at the end of the day, the hospital has to at least have the same costs as it does income. For every patient that gets care at the hospital that is uninsured and can’t (or won’t) pay his or her full medical bill, there has to be someone with insurance to balance out the costs. So you charge me $6200 when it really only cost $5200, for example. And you’ve made some of the money back that you spent on the uninsured person. Perhaps the woman’s urgent care clinic has found that uninsured patients will pay $125 for a visit, so they charge that much for them, and over-charge insurance companies to make up the difference. Who knows.
I’ll say it over and over: the uninsured get health care. It’s just expensive and inefficient and haphazard. Yes we continue to assume that it’s cheaper to allow people to go without health insurance, at the expense of higher costs for all of us.
Did’ja make a typo, Graham?
“Yet we continue to assume that it’s cheaper…”
or what you wrote:
“Yeswe continue to assume that it’s cheaper…”
Now, I’m just a stupid flea, not an economist… but doesn’t part of the problem stem from the separation of the consumer from the cost of the goods he is buying?
best,
Flea
As I understand it, Medicare has about one-third the administrative and overhead costs for processing a claim that private insurance does, probably because not so many hands are in the till with that” Nationalized Universal Healthcare” program.
Romney’s great idea sounds to me like a real deep feeding trougth for Mass medical insurance companies, said trougth to be filled by unwilling participants and the taxpayers.
It’s going to be interesting to see how the MA policy goes. With policies and copayments being way too expensive, people have to decide between heating the house and having insurance.
Tychecat has an interesting point – single payer systems tend to have a lower overhead cost. My finace’ worked for Kaiser in their billing and coding department, and it was chock full of waste and inefficiency. Reducing that waste would save money, which could be passed on to consumers in the form of lower rates. But I doubt that will ever happen.
Stupid insurance companies.
Hey Graham,
I’m a long time reader – really enjoy what you have to say.
I am just a bit confused by this post – could you clarify a little? We should shop for the doctor with the lowest price? Create competition among them?? I actually think I might have missed the entire car insurance analogy. Also how can you just say ‘uninsured get health insurance?’ A major factor is that they can’t afford it. I understand there is a group not getting it to save money but what about the people who can’t afford it? Do you think the Mass. plan is going to be an effective one? I was excited to read about it today in US News but I wonder how it will span out long term. I come from NY where we have programs like Child Health Plus and Healthy NY which seem to be quite efficient at taking care of the lower income uninsured. Do you think each state should have their own plan or would it make more sense to be nation wide? From the research I’ve been reading Canada is not doing as great as you say- they have physician shortages, Canadians are even coming to the US for care.
Thanks so much for sharing your thoughts with us, you are really heading in the right direction and have so much to offer this world. (just wish there were more people like you and me)
-amanda
requiring insurance, as in Massachusetts, might have some value but it avoids entirely the huge costs associated with running hundreds of differing companies. Nor, despite the shockingly high charges emanating from ERs (not to mention ICUs!!), are there many — if any — hospitals running significantly in the black. Relevant quote, from my recently published book “Cutting Remarks…”:
“In all my years of medical school and surgical training, I never once heard anyone say they were in it for the money. Yet I think there’s been an implicit understanding—as there ought to be—
that hard work and the production of excellence will in some way be commensurately rewarded. Isn’t that what we all want of our lives? Most of us make major life-choices with inadequate information. (I stumbled into a great marriage for all the wrong reasons, for example.) But the word is getting out: the profession of medicine is less and less about quality and more and more
about the bottom line. Take a look at the business office of a large clinic or hospital: there dozens and dozens of people in cubicles doing nothing but insurance paperwork. Multiply that by thousands of health insurance companies across the country, sucking
up billions of healthcare dollars (and distributing lots of it in executive salaries and investor profits). Doctors—even the ones with deep commitment—are helpless against the tide of paperwork, the demands and restrictions of insurance companies, the increasing
overhead. If you don’t give cash flow a high priority, you will get washed away. It’s hard not to become exactly what you never wanted to be: a money-grubbing automaton. I’ll agree that many doctors used to make way too much money. But times have changed.
So who will choose medicine if it’s true that those who for it—insurance companies and government—continue to make no distinction between those who provide a higher-quality product and those who don’t? People who believe in excellence will look elsewhere for professional satisfaction. Trust me: it’s happening. Exactly the sort of people you’d like to become your doctor are choosing not to…..”
“Also, to my knowledge there aren’t “in-network” providers of car repairs; you go to anyone in your neighborhood”
Factory warranties and extended warranties sometimes give the consumer a better deal if they go to a dealership.