"Hospitals see no problem in sending bills to insurance companies for five to ten times the amount that they actually expect, because they are simply playing the game that the insurance companies fashioned. But remember, they only produce one kind of bill, and it’s designed to send to someone who holds all the cards (an insurance company), and so can just refuse to pay anything they don’t want to pay. That’s their game. But what happens when you have to play the game with the hospital alone (if you don’t have insurance, or if your insurance doesn’t cover that stay for some reason). Then you’re on the hook for the ENTIRE amount. Most hospitals have a policy that allows people to negotiate for a lower amount, but most people don’t know this. And don’t expect the hospital to tell you about it, let alone help out. So even if you can remember to negotiate while you’re convalescing from a long hospital stay, good luck trying to get the deal the insurance company gets.
For the average person, this is no small matter. In the first case, a two day hospitalization that the insurance company got for $2,100 (after the insurance adjustment), would cost an uninsured person over $21,000. The adjusted charge ($2,100) would be a pretty nasty kick in the finances for most families, but they could bounce back. The unadjusted charge, which is what you’ll get if you don’t have insurance, is an almost certain trip to bankruptcy."
I don't blame you for it, since it's long, but I don't think you read the entire article, let alone the second page. I also don't think you actually understand how hospitals bill insurance companies. I'm not saying insurance companies are great: they are not. But their profit margins are substantially smaller than these "non-profit" hospitals featured in the article. Hospitals don't send a high bill to an insurance company, and then play a game of who pays what. All the rates are pre-negotiated. The second page clearly states that insurance companies, when they pre-negotiate, want to do so from the Medicare price as a starting point. Hospitals want to do so from their exorbitantly inflated "chargemaster" central pricing table. As hospitals and clinics have consolidated, they have increased their leverage over insurers so that they can force the insurers to pay far more than they used to.
>>But their profit margins are substantially smaller than these "non-profit" hospitals featured in the article.
Every time you hear non-profit anything, run from it like you run for your life.
These days a non-profit organization means, the organizations gets to make no profit but the people who run it, take the profit on the organization's behalf.
a two day hospitalization that the insurance company got for $2,100 (after the insurance adjustment), would cost an uninsured person over $21,000
Pooh, I ran up a bill of close to that size in only 12 hours without any serious injuries :-/ In fairness the hospital did tell me about their discount policy and cut it down by about half, but it was still kind of a ripoff.
Of course it seemed as if every doctor in the place took it upon themselves to have a quick chat with me, and then billed me for the privilege afterwards. I got copies of all the hospital records afterwards and the amount of duplication was ridiculous, not to mention dangerous; there's so much paperwork floating about that my discharge nurse initially gave me the paperwork for a patient in the adjoining room.
I think this is pretty unethical, really; ostensibly they're all there to help (and understandably want to to be able to defend themselves for accusations of poor medical care) but as I was recovering from a near-fatal accident the last thing I wanted was some new person coming around every 45 minutes to ask me the same questions afresh, when I had neither the energy nor the initiative to refuse.
From my experience, the weirdest thing is that you're rarely informed about something having a cost. It can be something as simple as a one minute chat that later shows up on the bill as a separate item. Not only that, but every time I've tried to ask what something costs, I can never ever get a straight answer out of them, I'll just have to find out when I get the bill and pray it's not too much. It's insanity.
Mechanics post prices? The only reliable way I've found to determine the real cost of car repair is to comparison shop and look online in enthusiast forums. Even then, there is still room for haggling.
Not only do they post prices, they will write an estimate and you have to sign it in order for them to begin work, and they can't exceed estimated costs without your approval. (In California)
My wife was in the ER a couple years ago - I asked multiple people (two nurses and a doctor) how much any of this would cost, and they all said "I don't know".
My wife was also in the ER a couple of years ago. She was there for about nine hours. At one point the attending came by and spoke with us for less than a minute. He basically repeated what the nurses and PAs had been telling us for the past few hours. But he clearly wasn't paying attention to the case because his summary was clumsy and lacking in detail. It was no more helpful than what I was reading on Web MD on my iPhone. My wife's exact words when he left the room were, "That was weird." Later, when we looked through the bill from the ordeal, it turned out that this awkward, uninformative, 45-second interaction was billed at almost $1000. If he had told us ahead of time that his unnecessary analysis was going to cost $1000 (even if it was paid by insurance) I would have thrown a shoe at him and told him to get lost. Healthcare is not a marketplace.
>>It was no more helpful than what I was reading on Web MD on my iPhone.
This kind of thing is what makes automation in the medical industry ripe for disruption. In fact close 80% of the information any doctor can give you in case of first 2-3 visits is what you would get by doing simple google search or reading WebMD or even looking up the Merck's manual.
Unless you have serious problem, automation can solve most of the problems people have.
>> If he had told us ahead of time that his unnecessary analysis was going to cost $1000 (even if it was paid by insurance) I would have thrown a shoe at him and told him to get lost. Healthcare is not a marketplace.
Exactly why we need automation. A while back CA's were considered accounting and auditing geniuses. Most of them are out of job today as accounting software got more automation and intelligence.
Wait till the time when most doctors go out of job as software automation sweeps health care industry.
Because not only do hospitals have largely-fictional rates they try to pass to insurers, there are also the medicare rates, the medicaid rates, the rates they pass to those trying to pay out-of-pocket, the rates for the generic equivalent they'll switch to after you agree to a drug/procedure due to your coverage, the discounted rates they pass to people who will almost certainly let the bill go to collections if it isn't heavily discounted, etc.
What's surprising in all this is, do they actually keep track if a doctor passing by had a quick 2 minute chat?
How do you go about it? You go and tell the billing department- "I talked with patient X for 2 minutes" and then Y, Z , A, B so bill it? If you talked to something like 100 people how do you keep track of it?
Sounds like an extremely cheap way of ripping off people.
If only I could bill my company that way every time some comes to ask me a question or needs my help or a code review or whatever!!!
Hospital billing is an outrage, just like the article claims. This corresponds to what the NPR report on the topic concluded: chargemaster rates are absolute fiction, invented to offer insurance company negotiators good deals, and utterly unrelated to costs.
Unfortunately, they do relate to actual costs for those most unable to bear them -- primarily uninsured middle and lower middle class people who face these ludicrous bills at face value and too often have their financial lives severely encumbered by them. The article does a great job of illustrating this.
I think this whole system of differentiated / > 150% profit margin billing - when people are at their weakest, a.k.a. exploitation-based healthcare - is utterly unethical.
I honestly don't see how anyone, and American public opinion in particular, can accept that such things are happening in their country.
In any other setting such billing practices would clearly be considered criminal / outrageous. Say if a surf-instructor at the end of the day charged you $80 for his sun lotion, or if lawyers you had not signed up with started offering you advice, and charged for it at a rate only known to you after the fact. And they would be swindling you when you would not be in dire need...
How can parents still be proud when their children become medical professionals in the US? Why do people still donate money to 'non-profit' hospitals?
Healthcare, the market, and decency don't mix. At least I'm happy to live in the UK where healthcare works (a lot better). The market is great, but one has to pick the right tool for each job, and the market not always is.
Not only are the prices outrageous and the process confusing even if you do have insurance, but patients are burdened with an absurd amount of unfriendly administration, in which all expenses are coded and the people you call up on the phone are little better at understanding these codes [1]. Now, those codes have some utility to medical bureaucrats, but because the healthcare system in the US is so unresponsive to people's needs the billing may as well be in a foreign language.
I used to live in the UK, and I really, really miss being able to go to the doctor and only having to worry about the medical advice you got, instead of trying to decipher pages of obscurantist documentation for your visit.
1. An example of (part of) the new system: http://en.wikipedia.org/wiki/ICD-10_Procedure_Coding_System The full ICD includes specific codes for things like being bitten by a turtle, sustaining a fall in an opera house, or 3 different situtions involving collisions with a lamppost.
$21k for 2 days in the hospital? Are the beds made of gold? To me it sound totally outrageous. I'm going to have an ACL operation in a very good European hospital, paying out of my pocket and the estimate is running at 4k EUR (say $5.5k) for the operation and one day in the hospital. I understand health costs can be unbounded, but it exceeds all reason.
It's worth noting that there is no relationship between a U.S. hospital bill and the actual cost of the service
If this is true (and I don't know that it is) then it sounds to me that the free market is not working in this area in the USA.
If it's not working then that may be because of supply restrictions because of limited numbers of places and/or high costs at medical schools and excessive restrictions on foreign trained medical professionals entering the US.
On the other hand becoming a doctor requires a high degreee of intelligence, high tuition fees and years of long hours as a junior at low pay while you continue to study and do further exams.
When you finally get to the promised land you have large debts and a relatively short career ahead of you. You also have rare skills and are a person who has delayed gratification to an extent that few others would be prepared to.
You are also in a highly responsible job and are likely to be subjected several stressful lawsuits during your career.
In a society where no limit seems to be placed on the earnings of sports stars and others in their early twenties, why should doctors be expected to restrict themselves to less than their market can bear?
I don't see how a correctly-working free market would lead to a different situation here. The market is necessarily inefficient:
1. Consumers don't have the skills required to estimate the value of medical care.
2. Consumers don't have the time to negotiate prices: if you're dying, you can't wait.
The question here is not doctor's salaries, that's a red herring. The question is why someone without insurance pays so much more than someone with insurance, if the care received is the same. It's because the insurance companies have the time and skills to negotiate prices, and individual consumers are under duress. It's the same reason that workers in unions earn better wages -- although the numbers are different: Wikipedia puts the gap between union and non-union wages at 21-32% in the US, and the gap between the cost of insured and non-insured care is much higher.
I say we have a moral duty to replace the current, broken, free-market system. Evidence from countries other than the US supports the theory that socialized health-care can be more efficient.
It's true the free market isn't functioning in healthcare. You mentioned doctor supply. During the late 1990s the American Medical Association convinced the government there was going to be a "doctor glut" so the American taxpayer subsidized medical schools in exchange for not graduating doctors, $100,000 for each doctor not trained.
You give a good example but it is worth clarifying that more than it being a non-functioning free market, it is absolutely not even close to being a free market. The Federal government is the biggest spender in the market, and with that comes a mountain of regulation and price controls. The states are probably the second biggest players in the market. Even things that almost everyone would agree with make it a less free market, like licensing doctors, certifying medical schools, and approving drugs. I think you could make the case that either a much freer market, or a completely state controlled system would lead to lower costs. The current situation reminds me of the pseudo deregulation of power in California that ended in catastrophe.
>In a society where no limit seems to be placed on the earnings of sports stars and others in their early twenties, why should doctors be expected to restrict themselves to less than their market can bear?
Because setting a price for maximum profitability means that whoever can't afford medical treatment dies
People not dying is probably more important than profit/free market/ensuring people can buy mercs or giant yachts or whatever, socially/politically/morally speaking. though if your opinion differs and you have a good argument for it, I'm happy to hear it.
>If this is true (and I don't know that it is) then it sounds to me that the free market is not working in this area in the USA.
There is no "free market". That's a 19th century superstition. For example, if something as basic as the price you pay for oil is determined by the wars your country fights then there's no free market. If your government prints inflated money at will. No free market. If the banking sector gets a 1 trillion dollar bailout. No free market. If a company or a lobby can buy several senators. No free market. If there is copyright and intellectual property rights. No free market. If your country can force others via military and diplomatic might to enforce favorable trade agreements. No free market. Heck, even if recreational drugs are illegal: no free market.
And even if it was, it wouldn't be working in this area. When you're dying you don't negotiate prices.
It's interesting when this comes up. Having grown up in a medical family I think there are some interesting misunderstandings about medicine between laymen (see fancy words here).
1. The treatment outcome between the standard treatment and the deluxe treatment is more often than not statistically insignificant. Basically medicine is still a barbarically primitive science where we barely understand what happens in a body. Thus trials take years and years and yet even if new drugs are approved they end up hurting people.
2. The medical "market" will never be a perfect, due to information asymmetry between the doctor and you the patient. Even if you think you know it's unlikely you are able to understand if option A is better than option B for your treatment.
3. If you have a heart attack you are in no position to negotiate what is a fair price or not, nor are you able to take a rational decision about what treatment is the best cost/benefit for your acute condition. Thus the "provider" has all negotiation power and can charge you what they want (you can of course refuse treatment but that's unlikely to happen).
4. Throw in a boondoggle of more or less serious insurance providers that creates what amounts to hundreds of "distinct" overstaffed administrative systems and you've got the recipe for a dysfunctional expensive non sustainable health care system where more and more "non-poor" people will outside any sensible coverage for themselves and their families.
Any solution to this problem will be drastic both for the industry as a whole and for society.
That said there are some possible good things happening over the next decade. Having a dad that works on cancer vaccines I can tell you that for certain cancers in the next decade the treatment will be as easy as a shot in the arm every week and the prognosis will be much better than the "literal" clubbing of people half to death with inaccurate drugs and chemotherapy.
5. Some patients like to file lawsuits, hence expensive lawyers, malpractice insurance etc.
Vicious cycle (involving hospitals, big pharma, lawyers, insurers) - can't just fix one aspect.
However, as you said - the latest advancements in personalized treatment of cancers are very encouraging. Treatments are becoming more effective, and doctors are finally starting to treat the untreatable.
The statistics show that most malpractice suits are meritorious, and malpractice suits account for 2% of the total costs of the medical industry. You can muddy the waters with "unnecessary testing" but then you have to consider both sides of the coin. If bills would come down if doctors did less tests out of fear of malpractice suits, how much would injuries from mistakes go up? The problem is: there is actually a lot of malpractice going on, and that has costs too.
The basic issue is that the medical field is unusual in being self-regulated. The malpractice system is really the only way we have to hold doctors accountable, and even within that, we adopt the unique practice of letting doctors themselves adopt the standards to which they are held, rather than using objective standards.[1]
We don't need to handle malpractice via the tort system. But in its absence we'd need something, say an OSHA-like agency that handled administrative complaints against doctors accused of malpractice. There isn't a free lunch here.
[1] Note that e.g. automotive engineers don't get to set the standards for negligence in the context of designing cars!
I've found there are some natural obstacles to getting clear data on tort reform.
One example comes to mind, from a few years back, when there was a movement to repeal tort damage caps in Kansas. Insurance companies turned out literal dozens of experts to testify before the state senate, all claiming that rates would skyrocket if the tort reforms were repealed. (There were something like 34 experts against the repeal to one lone attorney as an expert witness in favor of it, if I recall correctly.)
Now, it just so happened that Iowa had added the very same damage caps to their code the previous year. Bit of a fortuitous natural experiment, eh? Naturally, the curious senators asked each expert in turn how much premiums were lowered in the nearby state over the course of the last year. Sadly, they couldn't get an answer on the record, because every one of them fainted as soon as they heard the phrase "lower premiums."
Pretty much everything is this way. We get mad that politicians don't govern based on what the experts say, but the fact is that you can find an expert to say anything, and what is "obvious" or even "true" depends on what circles you travel in. Moreover, just as in this situation, a lot of the people who are in a position to really understand how a policy change affects the system (in this case, insurance companies and lawyers) also have a personal interest one way or another.
I'm personally quite wary of tort reform. Not because I'm a lawyer (I'm a lawyer because I'm the kind of person who is wary of tort reform!) They promised us the same thing about binding arbitration. It would get those overpriced lawyers out of the equation and let businesses just hash it out civilly with each other, they said. And look what happened--binding arbitration basically just became a way for big companies to force consumers to give up their right to sue. Companies rarely use it amongst themselves:
"When it comes to contracts with each other, corporations are far less likely to use arbitration clauses than they are in contracts with consumers. This was the finding of a December 2007 study by Cornell Law Professors Theodore Eisenberg and Emily Sherwin and Professor Geoffrey P. Miller of NYU Law School, who examined contracts from 21 financial and telecommunications companies. The data showed mandatory arbitration clauses in over 75 percent of consumer agreements but in less than 10 percent of their negotiated non-consumer, non-employment contracts." (http://centerjd.org/content/fact-sheet-mandatory-binding-arb...). In other words, corporations reserve their right to litigate. Arbitration is for the poors.
I don't really see tort reform playing out any other way, unfortunately. I wouldn't be opposed to a more regulatory or administrative scheme, but damages caps are just a way of shifting costs from the medical system (not just sympathetic doctors, but billion dollar hospitals and insurance companies) onto the people they injure. Indeed, of all the various reforms, damages caps are the worst possible one. By and large, if a jury awards someone a couple of million dollars, it's because the doctor really fucked up. Damages caps under compensate plaintiffs in the precise situations in which they are the most likely to be in the right! If we're worried about shakedowns, a far more sensible approach would be a "damages threshold." If you can't show you suffered more than say $10,000 of damages, nobody pays up. That would deter a lot more of the people just looking to make a quick buck.
Another option would be just giving some fraction of punitive damages to the state.
When lay people are shocked by judgment amounts, usually its because the judge was using some sort of damage amount that would actually make the offending institution change its behavior. But you could provide basic damages to make the patient whole plus lawyers fees to the patient, then allow the judge to reserve some portion of punitives for the state, and just label it something like a regulatory fine. People understand that fines can be high, they don't understand when people appear to get a windfall well beyond what might make them whole.
(OTOH, maybe if someone goes through having a scalpal left in them, they deserve whatever "windfall" they can get.)
Do you have any sources on alternative systems of accountability for doctors? Or that go a bit more in depth about how they are unique in self-regulation? I haven't heard of this before, so thanks!
So in most negligence cases, plaintiffs have to prove that the defendant failed to exercise "reasonable care." That is to say, the defendant failed to live up to the standard of caution that society had established for his activities. The standard is context-specific, but is almost always an objective one. What would a "reasonable person" have done in that situation? What would a "reasonable store owner" have done about the ice on the sidewalk in front of his store? In answering this question, the jury gets to impose its understanding of how an ordinary person should behave. This is true even in technical situations. Engineers at car companies are ultimately held to the standard of "did they behave like a reasonable person would?" Expert testimony can help explain to the jury what it needs to know to decide that question, but its the jury that gets to decide where the bar should be.
Medical malpractice is different. In medical malpractice, the relevant inquiry is: "what would a reasonably competent doctor practicing in a similar community have done?" That is to say, medical communities (e.g. rural hospitals in TN or urban hospitals in NY) get to establish the standard for how much caution doctors should exercise. Expert testimony is admitted to explain to the jury whether or not the doctor adhered to those standards. The jury doesn't get to establish the standard, only to determine based on expert testimony whether the standard was met.
The practical takeaway is this: "most deep oil drilling engineers do this" is a far weaker defense in a regular negligence suit than "most doctors do this" is in a malpractice suit. The medical profession is allowed to regulate itself in a way that say oil drilling companies are not.
As a general matter, there are a fixed set of ways to deal with this kind of problem. You can have private litigation (as in the malpractice system); you can have government regulation and enforcement (e.g. as in environmental protection); you can have administrative claims systems (e.g. as in workers compensation or no-fault auto insurance).
The alternative to the malpractice system is one of the above. It's not capping damages for a grossly negligent baby delivery to $50,000 despite the fact that it could easily be an injury of several million to the baby and his family (and ultimately to society through lost productivity).
Addressing this was W Bush's solution to the healthcare cost problem. But payouts due to malpractice suits are around 1% of medical expenditures and not all of those payouts are bogus.
Directly, yes. But there's a significant effect in overtreatment that is substantially higher. Hard to tell how much higher, because of course, all this overtreatment is justified somewhere. What we know is that we're paying about $10k/family/yr more than we should. The article treats this pretty well -- noting that malpractice isn't the only solution, but admonishing democrats for being too swayed by trial lawyers who want to keep feasting at the malpractice trough.
It is easy. The US pays twice as much as comparable industrialized countries for the same outcomes. Doctors in the US make twice as much, overhead is twice as much, and we pay twice as much for prescription drugs.
The US also does most of the innovation, develops most of the drugs, equipment, devices, and treatment regimens, and/or improves on or develops feasible products and treatments based on foreign research and development elsewhere.
Most of drug R&D is done as basic research in universities. Drug companies do do research, but their marketing budgets are higher than their R&D budgets. A large portion of the research is looking for baldness-cure/dick/sex pills, along with a substantial sum spent on patent work-around research which isn't setting out to create anything new, just do the same thing in a new way to work around someone else's patent.
The cost of the drug R&D you are talking about (aside from publicly funded NSF/NIH research) is minuscule in comparison to the healthcare spending expenditures we are talking about. Device/procedure research is even less of a blip.
Tort reform would help in two ways: The obvious reduction in lawsuit costs, and also help to lower the incentive for overtreatment. However, it is pushed way too often by the conservative establishment in the U.S. as a panacea for fixing our health costs. This is completely wrong. It is a tiny chunk of the problem, and the overtreatment incentives are still there, due to profit motives of so called "non-profit" hospitals, as detailed in the long ass article.
* the ability to set up a private NHS-like system in the US.
Right now, if you do this, you will get sued into oblivion.
But I'd like to put $5,000 into a pool with a bunch of other families, and have a bunch of technocrats (that I choose through the market, not one big group where I can hope I can vote for) decide how to best spend that money. Cover some things, don't cover some other things. This will necessarily mean that someone doesn't get covered for something, not because the treatment doesn't work, but because the treatment is not worth the money.
Only the government would have the ability to say no, in practice, and wouldn't due to politics (saying no means you'll be actively opposed by that person's family/etc., and it will be used in campaign attack ads; saying yes is a marginal increase in cost spread out over everyone.
> If you have a heart attack you are in no position to negotiate what is a fair price or not
But that's not what's described in the article: "his wife Stephanie knew she had to get him to MD Anderson Cancer Center in Houston. Stephanie’s father had been treated there 10 years earlier"
If you consciously choose to consider only a single provider, it's nobody's fault but your own that they now have all the negotiation power.
I am a European doing the entrepreneurship thing in the US, with a wife and 2 young kids, and I find the health care situation here my biggest problem and worry. I start every month owing $1400 to some health care company that, when push comes to shove, will to avoid paying the bills, sometimes with little recourse from our part. And this is being lucky because we found a company to take us...
When I hear my friends in Spain how hard it is to start a company there because you have to pay $300 to the public health system, I have to laugh. But seriously, the current healthcare environment is effectively turning away many entrepreneurs at their prime, since family and kids are usually in the picture, as parents cannot and will not risk their family's health. Sometimes taking a corporate job seems like the only option to avoid such risk, which again, yay for entrepreneurship!
Agreed, same situation here. Still, I don't believe the fictitional costs are the point where one should start fixing the system, not adding more beaurocracy. Insurance rates in Europe go up every year and the quality of service goes down. If the prices were really transparent, for everyone to see & upfront that would be a first step. Shame alone at such a criminal ripoff would make some doctors think twice - let alone trigger some good ideas how the system could be changed.
If you want a practical takeaway from this article, it's don't buy cheap health insurance. It just gives you a false sense of security, when in reality you're still uninsured against the biggest health expenses.
Any health insurance policy that includes uncapped coinsurance, lifetime benefit caps, or limits on per-day payout is going to leave you high and dry if you really need it.
A good policy that doesn't have these limitation is probably going to cost three times more, but it's going to be worth a thousand or ten thousand times more if you actually need it.
If you can only afford a crappy policy, consider whether you might be better off saving that money instead so you can at least cover your own minor medical expenses. The major ones are going to leave you screwed either way.
I don't think "cheap" is the best way to explain it. I have a high deductible plan which is pretty cheap and tied to an HSA. My wife and I are on the hook for the first $5,000 per year, and the insurance will pick up 100% of the costs after that. I won't run into the problems you're talking about. I like it because I don't really think minor medical expenses should really be covered by insurance anyway. I liken it to having car insurance pay for routine car maintenance.
My wife and I are on the hook for the first $5,000 per year, and the insurance will pick up 100% of the costs after that.
Sounds like you have a near-identical plan to the one my wife and I have. Don't bank on the insurance company doing what they say they will, at least not without a fight. Just to throw out a random example, in the few weeks after our daughter was born we received a dozen or so letters from the insurance company all telling us the company didn't think some aspect of the childbirth care was "necessary", and that they didn't want to pay for it. Quite a shocker for us, as the birth was relatively routine, and every intervention was something the medical staff thought was necessary. In the end, after hours of phone calls, we got them to pay for most of it, but definitely not 100% of the after-deductible amount.
I wish I could buy such a policy, but it's actually illegal in Massachusetts.
Insurers are not allowed to sell a plan that doesn't cover a long list of routine preventative care. And they're not allowed to offer deductibles greater than $2000 per person or $4000 per family.
The problem with paying for routine health maintenance out of pocket (or HSA) is that, in the absence of insurance negotiating the price down, a routine 15 minute doctor visit costs $85, and a routine blood test costs $400. Granted, hiding those prices behind a monthly insurance premium allows them to remain high -- there's a bit of a chicken and egg problem.
You should look into finding a doctor who doesn't take insurance. There are a few here and there, normally family/primary care type docs. You pay them cash, and because they have zero overhead in their practice for insurance billing, they can charge you less AND spend more time with you.
Interesting. If one found oneself seeking an insurance-free doctor in the future, how would one go about locating such a doctor? What questions would one ask, keywords would one search, or directories would one consult?
One advantage to a high deductible policy (besides being covered in case of something big and bad happening) is that your normal care will be billed at the rate the insurance company negotiates for all its clients, even if you are paying out of pocket or via HSA because you haven't hit your deductible.
HSA gets you the negotiated rate, you just pay the negotiated rate yourself. It's really the best of both worlds.
If fails if you have an ongoing condition which costs (at negotiated rates enough that the difference in premiums between a PPO and an HSA is less than the deductible for the HSA. Personally, I don't think charging $100-200/mo in premium and expecting to pay out $500-1000/mo in existing care from day one, plus the possibility of higher costs for new conditions down the line, is a viable proposition for a private insurer. That should be paid by individuals themselves or by government (as a direct subsidy), but it's not insurance.
I'm quite surprised we expect insurance to cover routine medical expenses. We're still paying for them anyway and now there's a middle-man to hide the true cost and take a cut.
It's still expensive, but catastrophic insurance the minimum people should be getting--like you said.
I've never seen a health insurance plan that doesn't have per-claim and lifetime limits and maximums. Insurance companies need to know their maximum loss exposures.
> Insurance companies need to know their maximum loss exposures.
Yes, but a dollar cap is only one way to do that.
In my case, my policy has no dollar caps, but of course it only covers reasonable and necessary care. I'm sure the insurer knows the probability distribution of expensive ways to die, so they still know their overall maximum exposure.
As a non-american I think the healthcare system is broken.
This is clearly a nexus between insurance companies and hospitals to drain people of their savings. They together have a good interest in keeping health insurance at very high levels.
The barrier to market is very high in both the sectors because of government regulations. If I was in that couple's place I would have used the $80k to fly to India and get treated in the top most hospitals such as Tata Cancer Hospital. for $80k I would have got VVIP treatment.
That is why Everyone in America needs a really good health insurance plan. Lesson Learned, don't be cheap while choosing your insurance plan at your company. Go #ObamaCare!
Here's an anecdote of what happened to me as an international student in the US. My mother stayed with me for about 4 months after I first arrived in the states, helping me to set up the apt, teaching me how to cook etc. My dad, who is paranoid about such things (he always buys travel insurance even for very short trips) insisted on getting health insurance for my mother, and reluctantly, I agreed to get it. There are many plans out there for a short term insurance, and I got one from a local company for about $400 for 6 months, which was an exorbitant amount back then when I had almost no money in the bank.
Anyways, come winter, and my mother gets respiratory problems. I took her to the local hospital, where they told me that I would have to put her in the ER. Turns out everything was fine, but she needed the reassurance of the doctor that everything was OK. We spent some 20 mins with the doctor. Bill for the visit? $250. Expensive, though expected, as it was exactly what it said in the insurance plan.
Anyway, much later, I found out that the insurance claim by the hospital was around $1000. I figured I had saved about $350 by taking insurance, but it struck me as odd that just meeting with a patient for 20 mins would cost so much!
There should be a way to pay cash (if you prepay) and get the lowest price available (legally, the medicare rate; I think the government legally requires the hospital to give it the best rate offered to anyone.)
The one big advantage of my $3500 annual deductible HSA (+RX) for everything routine is that I get Blue Shield's negotiated rates even though I effectively pay out of pocket for my <$500 in annual medical expenses. Out of pocket without insurance, I'd probably be paying $1-2k. Then, on top of that, I get the unlimited lifetime catastrophic 100% coverage after $3500 or $6000 or whatever, so if I had a serious medical issue in any given year, my total costs would be $1500 or so for annual premium plus the $6k out of pocket maximum.
If you're healthy, the HSA seems like the ideal plan, and really is how all insurance should be run. The weak link is that doctors/hospitals don't disclose prices upfront, and really have no way to telling you how much something will cost under your insurance, so it's hard to price shop.
In a year or two a part of Obamacare phases in that changes reimbursement structure from per-procedure payments to payments for overall effectiveness, whether it actually works is up in the air:
2015: "A new provision will tie physician payments to the quality of care they provide. Physicians will see their payments modified so that those who provide higher value care will receive higher payments than those who provide lower quality care. "
Sounds like that will work out about as well as rewarding schools for performance. The doctors who treat the sickest patients who are likely to die anyway will get screwed.
Problem is that the doctor lobby is huge. If it results in them getting more money, they will push it through. If it results in them getting less money, they will stop it.
Doctor pay probably needs reform, but going head-to-head with the doctor's lobby is nuts.
Obamacare fixes this problem by getting everyone essentially closer to the medicare rate. Because I have high blood pressure, I cannot even get medical insurance which Obamacare will fix as well.
I'm hedging my bets in that way; should I be diagnosed with something serious like cancer, I'll probably just fly to be treated with first-world health care at a reasonable price and in a tropical setting, in the country where my family lives.
Unrelatedly, I was recently in Monterrey, Mexico, where there's a huge industry around medical tourism; get treated with class just a few hours south of the border.
Despite what many Americans believe, hospitals outside the US are not candlelit caves staffed with black-toothed surgeons holding meat cleavers.
As I read further into the very long article, I think we as a society should consider statutory / compulsory licensing for medical patents, especially drugs. In Europe they limit prescription drug prices to a certain profit margin. This is again "cost plus" pricing that reduces the prices relative to what we pay in the states.
It may raise everyone's costs however, because this "cost plus" regulation incents manufacturers to increase costs to increase profits.
Statutory licensing would do the opposite: allow companies to compete with patent holders on efficiency of manufacturing while creating a mechanism to repay R&D.
Excellent (and depressing) article. I didn’t think there was much else I could learn about hospital “overbilling”; I was wrong. For example: I had assumed that very specialized hospitals such as MD Anderson placed “extraordinary” profit margins only on very specialized medications and medical services, e.g., cancer medications and oncologists’ services – not on more standard medical services and commodities. Another example: I knew that “non-profit” hospitals were non-profit in only the loosest sense. This article really re-defines non-profit hospital.
It's surreal that the government pays LESS for these services. "Cost plus" is a common practice for government contracts and often people point at it to explain why the military pays so much for a simple product. The contractor gets a fixed profit over whatever the costs end up being, which obviously provides no incentive to reduce costs, subverting market pressures to innovate or increase efficiency. Medicare is essentially paying cost plus, yet that is less than everyone else pays. How is this even possible?
I honestly wish I could summarise the economic causes that lead to these scenarios, but that would take too long. Instead, I would strongly suggest this boook if you are really interested in Public Economics: http://www.amazon.co.uk/Economics-Public-Sector-Joseph-Stigl...
So, the entire medical system--care providers and whatnot--could be improved (I believe) by nationalization: one of the best implementations of care in the US is actually the VA (Veterans Administration) hospital system, leading the way in medical records and treatment.
There is nothing other than greed, fear, and entrenched interests that forces such a poor quality of health care availability on our population.
EDIT: A pretty good read (from one of Houston's own) on this is the O'Reilly Hacking Healthcare book ( http://www.amazon.com/Hacking-Healthcare-Standards-Workflows... ). It's got some insight on how absolutely fucking crufty and retarded the billing and coding system for hospitals is.
I agree completely. The VA is a excellent example of a national healthcare system. Talking to veterans who've spent time in the VA, and visiting VA hospitals are a surefire way of convincing people what side to be on for the NHS debate.
The problem with the VA is the quality of care seems to vary greatly by facility, and until maybe 4-5 years ago, the VA was essentially structured to give care to some very aged WW2/Korea veterans (and relatively indigent Vietnam veterans (i.e. not even most of them) who could claim service-related disability.) I'm not sure if that was due to resource constraints or what.
Post Iraq/Afghanistan returnees with service-related disabilities (TBI, amputations, etc.), I think VA has gotten more resources and is now treating a younger/healthier patient population. It also cooperates a lot more with DOD active-duty care than it used to.
Mere nationalization isn't the big difference between the US and all the other countries.
It's the fact that Americans are completely paranoid about being told "no, that's not worth it" when their doctor wants to do some procedure on them that might save their lives.
I really like the VA's model, but if you just start out on a goal to "nationalize the system" you won't get the VA.
Or what about just a private health care system that works? It needs to be supervised by the government and outside the influence of lobbyists and such.
There is something seriously wrong with the system here, and I think it's government's own fault for embracing this system despite it being completely flawed.
Harder reality: with collective political action (including lawmaking) you can force anyone to provide you the same service for less that what he asks (if the raw cost of the service permits it).
And some services --like health-- are so crucial for the community and human dignity that they shouldn't even be left unregulated outside mass democractic control in the first place.
The same way we don't let the "market decide" what drugs are OK to be sold (e.g by letting the people "freely" choose to buy some experimental or dangerous snake-oil stuff).
In which case, a cure for any terminal condition is worth an infinite amount of money given that people would, if you required them to, generally give you all of their money and any more that they could borrow, beg, or steal.
And if left to the "the market should be totally free / now give the banks a state bailout and use the state military to ensure we get cheap resources from abroad" proponents that's exactly what would happen.
Well, I'm not for "you have to pay for MY health care".
I'm for: "you have to pay to build a sustainable health care system that encompasses the whole of society, including YOUR health care, and I don't care if you are a rich prick who doesn't care about others".
you mean, you're for enforced servitude. I get it - slavery is back in style, because that's what it is when you take from one person to give to another, no matter what the relative positions of the two persons are.
No, I'm for democracy with the full original meaning of the word (as in ancient Athens), which includes a full list of obligations from each and every citizen to his city-state and all of his fellow citizens.
The word for individual that didn't want to contribute to their state, in ancient Athens, was "idiot" (literally: private), and it meant both the "private citizen" (a citizen involved only in his private affairs) and the imbecile.
That's where we got the word "idiot" from, and I find it very appropriate.
>I get it - slavery is back in style, because that's what it is when you take from one person to give to another, no matter what the relative positions of the two persons are.
No, it very much matters what the relative positions of the two persons are. It makes all the difference in the world.
For example, the rich slave owners in the South should not just have their slaves freed. They should also have had to share their estate between their slaves (the very persons that were the unpaid source of his wealth until then). That way we wouldn't have to wait until 1950 to end segregation, nor we would have the problem of piss poor black families going forward (and the crime that goes with that), or Jim Crow laws.
On almost any other topic I'd be the first to agree with you.
But people aren't buying this kind of medical care voluntarily, and that throws a lot of capitalist idealism out the window.
In fact, there are a lot of reasons why normal supply and demand aren't quite applicable for medical care.
Imagine a person having an accident that injures them and knocks them unconscious. They don't pick the ambulance service, they don't pick the hospital they go to, they don't pick which doctors work on them, etc. But they still get the bill for all of it.
I use that ambulance example myself. It's a pretty good visualization of why we can't put all of the health care system under a free market.
However, there are parts of it that can be. (And even for the instances where you really have no choice, price visibility could still provide some cost containment.)
> But people aren't buying this kind of medical care voluntarily, ...
The subject of the article most certainly did choose M.D. Anderson voluntarily. That hospital is famous as a spare-no-expense luxury resort institution. They could certainly have gone an oncologist in any large city and got treatment that was nearly as good.
Hard reality: a thing is worth exactly what another is willing to pay for it.
How about putting a gun to the doctors forehead and demanding free treatment for my loved one? Oh wait, there is a state and there are laws, we're not exactly a Wild, Wild West. Some laws regulate certain things, medical care can be one of them
Pretty much. People too easily forget that the most basic human freedoms are not life and property. Those are creatures of law. The most basic human freedoms are the innate right of every animal to kill what it can and take what it wants.
Change that to "... the innate right of every animal to try to kill what it can and take what it wants" and you're spot on. And that of course is a big advantage of law (and custom): We don't get into these contests of brute force quite so much.
Instead of complaining, one should try to see the business opportunities there.
Many talk about finance and Wall St and the quants. Healthcare is 20% of the GDP, and based on the most basic human need, the lowest of the Maslow pyramid.
No, looking at treating sick humans--people who have no choice but to get treated or die--as a business instead of a social responsibility is exactly the problem. Business opportunities created the disgusting situation we're in.
It's probably easy to say that if you're not one of those directly affected by this nightmarish system. Maybe you should read the article and see if you can sympathise with some of those who were. With a system so grossly broken and unfair, it seems to me there is plenty to complain about indeed.
I'd say building a business that improves these issues is close to the best we can do to help those directly affected by the system.
I can imagine an app that would help the uninsured to survive a hospital without going bankrupt could do quite well. You would have a very clear distribution channel (hospitals and word-of-mouth while at the hospital) and a strong need with a quantifiable upside.
You could probably make an app that's just an e-book that's already worth $20, let alone when you add things like a TrueCar.com for hospital charges.
> I'd say building a business that improves these issues
Business is the issue. Money is not the correct incentive to solve every problem; healthcare needs to be treated as a public good, not as a business opportunity.
We can stop contributing to the problem by trying to make a buck off people's misery, and stop voting for those opposed to doing healthcare as a public service.
> Instead of complaining, one should try to see the business opportunities there.
Seeing things through the lens of business opportunity is a great thing to do when incentives to provide high quality service at the best possible price are lined up with treating people well.
I'm not convinced this is the case with medicine, but I'd rest easier it if someone who worked in it could convince me otherwise.
What makes americans go to American hospitals unless they have insurance?
If I was this guy, I'll bolt to, I don't know, Thailand or Hong Kong or maybe even Switzerland.
You'll get all the examinations and all the treatment for a fraction of the cost (in case of Switz, all of it), tickets and living included.
Mostly I think the barrier (for non-emergent conditions) is just ignorance. But that's changing. Health tourism is growing.
I keep waiting to see when somebody will open a hospital cruise ship, park it just outside US waters, and provide Thailand-cost care within convenient range of vast US markets.
I am from India. Some of my family members settled in United States visit us just for dental treatment. Cost of entire treatment in India is much lesser than Insurance for 2 years + flight tickets.
The prices are lower for you relatives in India only because they pay in dollars. But if you are a Indian, working and making a living in India. Expect a similar rip off!!
My aunt had bladder cancer was detected in early stage and she survived. She had no insurance. Cost of total medical services were below $10k (Surgery was performed by the best surgeons in India, the same people who also treated celebrities and politicians).
Nopes! I can get a root canal and a crown for merely $80-$100 which is approximately 4% of my monthly salary in India. Same treatment will cost me $500 for root canal and another $800 for a crown. total $1300 which is around 20% of my monthly salary.
Not necessarily, in other countries the relation of medical costs to average middle class salary might be very different. While in USA you are billed an annual salary for a short stay in the hospital, in many countries it's more like a month salary or less.
[EDIT: Immediate downvote? New personal record! HN is becoming more and more liberal I guess. Never mind.]
Once again, there are many opportunities for improvement. Business opportunities.
Healthcare is plagued by inefficiencies, over regulation, and "just think of these people who suffer" mentality- basically, we undertreat, overtreat and in both case overspend because of inefficiencies caused by overregulation, just because we don't have the guts to say "no". (the fear of prosecution might also help.) To those who are so worried about people being left to die in pain as the result of a "no", just think about how cheap morphine is. There is no need for pain and suffering.
It might take a long time to solve all these issues, if it can be done at all, but there are many good ideas thrown around.
Price transparency - ie knowing in advance how much a procedure will cost depending on the most possible outcomes would help. It should be mandatory - for the most typical stays, give a detailed pricing in advance then let the market solve the problem.
Ending the price discrimination would also be a great thing. Same service = same price. Insurance are getting low costs not because of their "volume purchase" but because they use their market power, as oligopsonies, to get the low price they receive, subsidized by the non-insured.
The current incentives make sure that the minimum is being done (if only to code and bill for that - like the chest X ray in the example. If it was not billed, how certain would you be that it was performed 100% of the time?) and it is a good thing, because I am more worried by undertreatment than by overtreatment. The latter may only cost more, but the former may cost more due to delayed proper treatment and may cost lives.
As shocking to my libertarian values as it can be, I recently came to the conclusion that subsidized first line triage should be offered, not even at costs, but for free.
Healthcare has an information problem - it's hard for patients, especially if they are uneducated, to determine how grave their symptoms are. Even if they are intellectual and successful - so don't think it can easily be solved by education. Read about Don Rosa eye problem, how he delayed treatment for a grave retinal disease.
In economy, self rationing is usually good - but when that decision is based on a lack of proper information of the consequences and their future costs, it's not.
I'm not suggesting to provide free treatment here - just at least free information. A right diagnosis, upon which the patient can decide what to do.
Markets work best when some basic conditions are met. There is no real market in healthcare at the moment because prices are not published, and the information asymetry, while less important than before thanks to the internet, remains strong.
Once we have a medical tricoder and an ebay-like place for medical procedures, I guess the situation will improve.
[medical tourism is a step in the right direction, but even discarding the information problems, until prices are properly aggregated and compared, it won't be enough]
> Ending the price discrimination would also be a great thing. Same service = same price.
This is actually an anti-libertarian idea.
But is a very good idea. This is a service industry, not a manufacturing industry, so there is very little "economy of scale" coming into play, and the consumers with the least ability to pay have the highest prices.
Heck, you could even say "prices must be within a factor of 4" and it would still be an improvement over today's system.
If it was a working market, with published MSRP and true competition, price discrimination could theoretically be used to increase surplus. But it's not currently a market!
At the moment, it's not. I'm not concerned with dogma so much - I care about efficiency. Ideally, all regulations would be removed.
But we are not starting from scratch - we have the current status of healthcare. We want to go to a working market - the question is how can we do that?
Enforcing uniform prices is a step in the right direction - because the uninsured will stop subsidizing the abnormal low rates insurance companies can strongharm the hospital.
Welcome to being a liberal-tarian. We can support solving externalities (like your free triage does) without saying that the government should run it, etc. Public funding of open / competitive systems can be the optimal solution to problems like this - just how roads and utilities are built (both of which are pretty reasonable the older the industry).
I.e. Internet has way higher margins than natural gas service because we haven't gotten internet monopolies regulated as well as natural gas b/c the latter has been around for longer and has been refined pretty well for the end-user's needs.
This is horrible. Also this is an opportunity for countries like India.
For example for $83k they would have got VIP treatment in India. Yes, India may not have the high-tech stuff in there but for that kind of money you can easily get more value for your money.
I have worked in a cancer hospital in India and I know for sure that Indian doctors are way too experienced than their American counterparts. I have seen doctors working 15 hours a day conduction 5-6 surgeries as day and seeing upto 70 patients per day.
The system is rotten to its core. I'm a "lucky" one. I'm in Europe and I've got a mandatory healthcare which I'm paying big bucks for and I'm also taking an additional insurance, covering fancy costs (like if I want a chamber alone in case I'm hospitalized etc.).
The problem is that this whole crazy-high-prices / insurance / pharmaceutical / medical / doctors / nurses costs are giving a sense of entitlement to basically everyone in this mafia: from the state (which feels entitled to tax everybody up to level that are already considered to be confiscatory to some, like in France) to the practitioners to the insurance companies to the doctors and to the... patients!
And don't you there criticize the highly-socialist nanny state for running on deficit, always creating more and more state debt, or you'll be labelled an ennemy of the human race: "what!? you want the state to give less money to healthcare, you are a cold-hearted selfish man!"
The whole system is rotten and I this point I wonder if I'm going to keep doing exams and going to the doctors.
The drain on the economy is so gigantic that we could already be, today, lagging behind in our understanding of science and medicine compared to where we should have be if we hadn't allocate such a gigantic amount of our resources to this mafia.
It's a big business and it's ugly.
It is indeed slowly killing the entire economy. The problem is way more serious than the derive of finance. Finance looks like a tiny toy compared to the whole healthcare / pharmaceutical / insurance mafia.
In the end socialist and their never to be questioned healthcare cost are going to drive countries to the only possible exit: state default.
And when that is going to happen I can tell you that the quality of the healthcare system is going to take a nasty hit.
You socialists are going to get what you're begging for.
So, is your claim that countries with socialized health care (e.g. France) have economic problems due to the immense spending on health care compared to countries without socialized health care (e.g. United States)?
> In 2005, France spent 11.2% of GDP on health care, or US$3,926 per capita, a figure much higher than the average spent by countries in Europe but less than in the US.
> According to the World Health Organization (WHO), the United States spent more on health care per capita ($7,146), and more on health care as percentage of its GDP (15.2%), than any other nation in 2008.
> And don't you there criticize the highly-socialist nanny state for running on deficit, always creating more and more state debt
http://truecostofhealthcare.org/hospital_billing
"Hospitals see no problem in sending bills to insurance companies for five to ten times the amount that they actually expect, because they are simply playing the game that the insurance companies fashioned. But remember, they only produce one kind of bill, and it’s designed to send to someone who holds all the cards (an insurance company), and so can just refuse to pay anything they don’t want to pay. That’s their game. But what happens when you have to play the game with the hospital alone (if you don’t have insurance, or if your insurance doesn’t cover that stay for some reason). Then you’re on the hook for the ENTIRE amount. Most hospitals have a policy that allows people to negotiate for a lower amount, but most people don’t know this. And don’t expect the hospital to tell you about it, let alone help out. So even if you can remember to negotiate while you’re convalescing from a long hospital stay, good luck trying to get the deal the insurance company gets.
For the average person, this is no small matter. In the first case, a two day hospitalization that the insurance company got for $2,100 (after the insurance adjustment), would cost an uninsured person over $21,000. The adjusted charge ($2,100) would be a pretty nasty kick in the finances for most families, but they could bounce back. The unadjusted charge, which is what you’ll get if you don’t have insurance, is an almost certain trip to bankruptcy."