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This is how ridiculous our medical system is
My wife went to the hospital with massive chest pains a few weeks back. She got all the tests including the treadmill stress test. Everything was fine, no heart attack. We still don't know what caused it but it wasn't cardio or neuro, probably some kind of intense muscular event.
Anyway, the bill came and it was $12,600 (and that was just the hospital, not the various doctors.) If we didn't have insurance, that is the amount we would have had to pay and I can guarantee you that the next time either of us had chest pains, we would probably not even consider dialing 911.
Here's the kicker. We have insurance. The adjuster knocked down the overall bill, get this, to $700 and since we had met our deductible already we paid 20% of that $700 with insurance paying the rest of the $700.
That's a 95% reduction in the bill. Think about that for a moment. No insurance? Please pay us $12,600. Oh, you have insurance and we are a preferred provider under your plan. Well then, the bill is now only $700.
How does this make any sense?
68% of bankruptcies have medical bills as their root cause. Every person in America actually paying for insurance pays $1000 per year in additional premiums just to make up for the uninsured.
We had insurance so we called 911. Without insurance, how many people wouldn't dare.
This couldn't be a more ridiculous system.
Anyway, the bill came and it was $12,600 (and that was just the hospital, not the various doctors.) If we didn't have insurance, that is the amount we would have had to pay and I can guarantee you that the next time either of us had chest pains, we would probably not even consider dialing 911.
Here's the kicker. We have insurance. The adjuster knocked down the overall bill, get this, to $700 and since we had met our deductible already we paid 20% of that $700 with insurance paying the rest of the $700.
That's a 95% reduction in the bill. Think about that for a moment. No insurance? Please pay us $12,600. Oh, you have insurance and we are a preferred provider under your plan. Well then, the bill is now only $700.
How does this make any sense?
68% of bankruptcies have medical bills as their root cause. Every person in America actually paying for insurance pays $1000 per year in additional premiums just to make up for the uninsured.
We had insurance so we called 911. Without insurance, how many people wouldn't dare.
This couldn't be a more ridiculous system.
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And we have laws which the Pharmaceutical manufacturers lobbied hard for that make buying our drugs from abroad illegal. I live close to the border with Mexico, and choose to break this law with bimonthly trips that save me about 60% of what I would pay here in the US with no prescription plan. The whole system is some nightmarish amalgamation of 'smoke and mirrors' and an outright scam.
June 7, 2009 3:13 PM | Reply | Permalink
Here. Try one of mine:
http://www.boingboing.net/2009/06/06/health-insurers-inve.html
June 7, 2009 3:15 PM | Reply | Permalink
I never really thought about it like that. I really did not. If you do not have insurance and you are experiencing chest pains, FOR CHRISSAKES GET IN YOUR CAR AND RUN INTO A GARBAGE CAN OR SOMETHING.
Have the no-fault people pay the bill.
This is a great post Candide. And I certainly hope your wife is doing better. Probably scared the bejeeesus out of both of you.
June 7, 2009 3:39 PM | Reply | Permalink
"The adjuster knocked down the overall bill, get this, to $700"
Are you saying that the hospital, doctors, etc. all combined settled for $700 total? Or are you saying that for your paperwork and billing purposes the adjuster wrote in $700?
A friend had an outpatient hernia operation, 3 hrs. Bill was over $20K. His insurance "covered" it except for $3K which he decided to pay out of pocket.
The fake billing system is clearly a racket. Its main effect is to scare the uninsured away from seeking such medical care, and a secondary effect is to pressure people to buy insurance. It's possible that the secondary effect is the intended effect.
A similar situation could obtain with the government providing basic health care services at low cost. Then there could easily be a large gap between those and "non basic" services as the middle market gets killed off.
June 7, 2009 3:54 PM | Reply | Permalink
The hospital is a "preferred provider' and agrees in advance to whatever bill adjustment our insurance company deems appropriate.
June 8, 2009 8:47 AM | Reply | Permalink
True.
I'm not sure, but if Hospital is like Pharmacy then this agreement has one important consequence in the patients favor:
The hospital Must Accept the payment from the insurance company and MAY NOT charge the difference to the patient.
So... In pharmacy, anyway... if they accept the insurance, then they can't charge you extra (beyond your normal copay)
June 8, 2009 12:47 PM | Reply | Permalink
Yes that is what causes prices to rise for other people who are not covered by that insurance plan, because the real costs of providing the care you received are likely well over $700 in addition to being well under $12K + doctor fees. So the insurance co. is ripping off the providers in this case, while giving you cut-rate pricing, for its own reasons.
Bill padding has become endemic, and not just in health care.
The overall problem cost-wise is that the people who want health care are not responsible for paying for each instance of health care and generally disconnected from plan creation. The conflict of interest remains, whether the government pays or some private insurance company pays.
June 8, 2009 2:39 PM | Reply | Permalink
VA hospitals provide excellent care but they are few and far between and they are not level 1 trauma centers. There are many sad stories of veterans arriving at a VA too late because they fear the costs of calling 911.
Also, never make the mistake of going to the nearest hospital in an emergency instead of calling 911. Your emergency care may wait till they can prove you are insured. My mother could tell you about that one and my terminally ill sister who had seizure in the car. It didn't matter how much insurance she had until the hospital could prove she had it.
June 7, 2009 4:49 PM | Reply | Permalink
This is the short version no links and there are more convolutions to this than time to write.
Facts:
In America a hospital bill is discounted by 70 to 80 percent depending on the state. That is the hospital is paid 20% to 30% of the presented bill by the insurance company. If one does not have insurance the patient is demanded to pay the total presented bill or legal action will occur.
These facts do not cover the bill for the medicine.
For the medicine the insurance company pays the presented amount. The hospital and/or the drug store who presented the bill pay the list price to the drug company. The drug company has a "private" contract with the insurance company and the insurance company is rebated the difference between the negotiated discount and the list price. No one knows the discounted price because the contract is "private" my congress man's aid told me 4 years ago. BS!
One can assume that if the discount for people and mortar of the hospital is discounted this much the amount of discount for a penny pill is great.
What fools we Americans are!
June 7, 2009 8:39 PM | Reply | Permalink
IF anyone wonders what privitization with get us, there's one FINE example.
June 8, 2009 12:32 PM | Reply | Permalink
Hospitals buy their medications at a BIG DISCOUNT!!! In my retail pharmacy I can't even come close! They also get reimbursed per dispensing... That's why you'll only get 1 or 2 tablets at a time when you're in the hospital... Each time they send you meds, they get paid another dispensing fee...
They often dispense Brand Name meds when a generic exists... I can't do that.
Anyway... You are right about the drug company rebates... this is a huge problem with State Medicaid programs, incidentally...
But in retail pharmacy I am NOT ALLOWED to show you (the patient) what your insurance company is paying me as reimbursement! You (the patient) can't know just how badly your insurance company is reimbursing the pharmacy...
June 8, 2009 1:09 PM | Reply | Permalink
When I worked at the pharmaceutical company I have discussed earlier, the distribution of costs to divisions was approximately:
Research and development 5%
Cost of materials for manufacturing 9%
Administration 25%
Marketing and advertising 37%
Cost of facilities 21%
Taxes 3%
Even in the face if these abuses, the insurance companies are the real culprits in escalating health care costs.
If you think that healthcare costs are due to the actions of malpractice attorneys, try calling one with a case not involving death or crippling injury and they will tell you that you don't have a case.
June 7, 2009 10:16 PM | Reply | Permalink
Studies have shown a direct connection to insurance company Wall St. investment losses and price hikes in what they charge physicians for liability insurance. There is no direct connection between a rise in jackpot jury awards and liability insurance price hikes because those court cases haved remained steady for decades. The few really huge awards always stem from egregious negligence on the part of one party.
In this country insurance companies have a nice racket going. They are guaranteed profits by the government. When their investments fail they can just jack up their rates. Time to change that.
June 8, 2009 11:40 AM | Reply | Permalink
There is something wrong when a business puts a price an a product and the buyer says, "I only pay 40% for that", pays 40%, and takes that product.
What free market? The small providers are being screwed while the larger clients have "private" deals.
June 8, 2009 12:36 PM | Reply | Permalink
Well... I'll admit there's a HUGE problem... But, for the sake of argument, let me explain this kind of thing from the perspective of a pharmacy owner dealing with Insurance Reimbursements.
For a pharmacy (or a Doctor, hospital...) to accept your insurance they have to have a Contract with your insurance company. There are MANY MANY MANY different contracts that we carry so we can accommodate as many patients as possible.
All of these contracts will clearly spell out what the "Reimbursement Rate" will be for filling a prescription. They are usually something like:
Average Wholesale Price (AWP) - 16% + $1.80
(or something close to that ... maybe -15% or -18% ... maybe +$2.00 or +$2.25)
Now I belong to a buying group and I'm able to purchase meds around AWP - 18%
So, you can see I am basically being paid about $2.00 (above my COST) to fill a prescription.
It COSTS me $12 to fill an RX. I have to pay my pharmacist, pharmacy tech(s), Bank, Insurance, Electric company, etc... etc... etc...
At $12/Rx I just break even... That doesn't give me personally any income at all... I have a wife, two kids, two cars, and a mortgage... So, I've GOT to make more than $12/Rx to support my family...
So...
When a "Cash Paying" (i.e. No Insurance) patient gets a script filled, I have to charge them more than I otherwise would simply to cover the losses incurred from filling Rx's for those with insurance.
I would be confident in saying that hospital and doctor reimbursement rates are dismal, as well.
I'm not sure how they justify THAT kind of price... but I know that somebody has to pay somewhere along the way...
June 8, 2009 12:41 PM | Reply | Permalink
Sadly, even a $700 bill out of nowhere would be enough to pretty much put me out of my apartment.
When we're actually happy to have to pay ONLY $700 for some basic diagnostic testing, you know we're in trouble.
The idea that these services are either worth $12,600 in the first place or that they cost that much to render or produce is itself completely ridiculous as well. This is just greedy bastards trying to make money off of people getting sick. No more, no less. That's what our cultural philosophy boils down to. Life is not our priority. Money and bragging rights are.
June 8, 2009 1:05 PM | Reply | Permalink
"When we're actually happy to have to pay ONLY $700 for some basic diagnostic testing, you know we're in trouble."
this.
June 8, 2009 2:37 PM | Reply | Permalink
You can almost certainly set up a "Payment Plan" with the hospital, et.al.
They do this all the time...
June 8, 2009 1:10 PM | Reply | Permalink
Typical of our rotten to the core system of healthcare for profit.
Other than the corruption of our entire economic, political and social elite, can anyone think of a reason why we would save a system that produces such obscentities as that outlined above?
June 8, 2009 1:56 PM | Reply | Permalink
sorry about what you went through Candide. Decisions about health and well-being are made by insurance companies.
In fact, I can't remember the last time my personal health needs were considered a private matter-- between me and my doctor.
I think maybe it was 30 or so years ago.
So many politicians are saying the last thing you want is "some Washington bureaucrat" making medical decisions for you.
Like all big government is bad. It's not true.
Big government isn't bad if it's smart government.
Big government created our military and defense and it's the best most advanced force in the world. Second to none.
If we can have a pentagon for defense, why can't we create a "pentagon" for heatlh care?
June 8, 2009 2:57 PM | Reply | Permalink