Abdul: > Actually, that's not exactly the reason. The reason is that the insurance > companies negotiate lower prices from the hospitals. (The Capitol Hill > problems are real, but not the cause of this particular price difference.)
Why should insurance companies be able to get lower rates through negotiation? IMO, the flaw in the current thinking about medical care, insurance, and drugs is that the consumption of these things is negotiable. It isn't. For example, if your TV stops working, you go shopping for a new one. If you don't like the price of plasma TV's, you can wait for a sale, decide to buy a cheaper CRT set, or just stop watching TV altogether. You can't do this with medical problems; going without treatment is not on the negotiating table. At least, it isn't for someone like me who wants to continue living. Likewise, trying a cheaper treatment or operation isn't always an option, either. In my case, the only treatment for kidney cancer was to cut the malignant thing out and throw it away. Fortunately, the other kidney functions well and is not cancerous (FYI, kidney cancer is fairly common, but it is very rare for both kidneys to be cancerous). Anyways, back to the issue of medical costs. The law of supply and demand doesn't really apply in the usual way. To recap the law of supply and demand: 1) The supplier is willing to sell more units at marginally higher prices, 2) the buyer is willing to buy more units at marginally lower prices, therefore 3) there is an ideal point where the selling and buying prices meet which will result in optimized unit volume sales and maximized profit for the seller. This is Economics 101. The problem with all the talking heads' theories about the way to manage health care is that they all seem to think that the law of supply and demand applies to everything. As I stated before, it doesn't apply in the usual way to medical care. You will consume as much medical care as you need, at any price (up to your maximum ability to pay), or you will die. What kind of choice is that? As to negotiating rates, here is why it's a fallacy: the number of any given procedures or treatments is going to be fairly constant in a given time period. After all, there is a given number of people in a fiscal year who are going to need a nephrectomy (that's medical lingo for the surgical removal of a kidney). So, if the numbers of different types of operations in a fiscal year can be predicted fairly accurately, based on past years' data, the total costs of performing these operations can be predicted also. So, just take that, tack on a modest profit if it's a for-profit hospital (2-7% maybe), and charge the result for it. No negotiations would be necessary or possible. And EVERYONE pays that amount - no sweetheart deals for insurance companies. Because if the insurance companies get sweetheart deals and get to pay BELOW the actual cost, then those who are not represented by lobbyists have to make up the difference by paying ABOVE actual cost. I, for one, don't like the idea of being forced into indirectly giving my hard-earned money to some huge insurance company who has no financial obligation to me, and will just take that money and buy lobbyists to lobby further against my interests. Hey, that sounds like what's going on right now! > > (And my apologies to the out-of-US readers of this list; this problem is > peculiarly American, I think.) > Yes, Canadians only need to read this to know how lucky they are. I told my story to one of my Canadian customers. He says he has lively discussions with some of his friends who advocate privatization of the Canadian system. When he tells them my story, they shut up pretty quickly. Americans - we put a man on the moon and land probes on Mars, but still don't offer health care to all our citizens. > Now, you don't have to buy insurance to get the lower prices. First of all, > you can often negotiate after-the-fact for a lower amount, but I won't go > into details on that -- suffice it to say that a hospital may prefer to > accept a fraction of the original charge rather than going through a > complicated and failure-prone collection process. I.e., if they don't > accept the settlement, they might get little or nothing. The hospital can also RUIN your credit rating if you don't pay or don't pay in full. I like having a good credit rating. Non-payment is not an option, because I did sign an agreement stating that I would pay. I wasn't educated at Enron U. - it's a matter of personal integrity with me that I honor such agreements. I did manage to be somewhat savvy about what I agreed to. I made them strike out clauses where leins could be put on my estate in the event of my death. And also made them not require another person to financially guarantee payment in the event I couldn't or wouldn't pay. So basically, they only got paid if I survived the surgery and they did a good job (I wouldn't have felt obligated to pay if malpractice occurred)! That's the way it should be. > Hospital bills also *commonly* contain overcharges of various kinds. Yet another symptom of morally bankrupt medical economics. > Then, if one of us gets seriously ill, we'd switch immediately to an HMO. > No delay. Expensive, yes, but better than paying high medical bills. CAUTION: Are you sure you can do this? Even though Massachussettes may not have an eligibility waiting period, you still may not be able to get a preexisting condition covered. Make sure you know EXACTLY how that law works. In Florida, the eligibility period is 12 months. > In another state, one could buy catastrophic care insurance and set up a > tax-deductible Medical Savings Account. We can't do that in Massachusetts > because it turns out that the insurance which would qualify for the tax > deduction at the federal level will not meet Mass. law for insurance. I.e., > it can't be sold here.... that's also insane.... How about when you travel? How does it work then? You will be outside of your "plan area", right? You said it yourself - it's insane! Why the hell does this corporatized, institutionalized, self-propagating insanity continue to exist and escalate? It certainly doesn't serve the public interest. > sold by the National Association of the Self-Employed. Note that these > associations are closely related to the insurance companies, they are a bit > of a scam, but they also do sell real insurance (and provide certain other > services). Apparently, the Alliance is settling a class-action lawsuit > that, among other things, established clearly that, no, you don't have to > pay Association dues in order to get the insurance. (We weren't told that....) Wow, that sounds like a company that I would really want to trust with my life...NOT! > The insurance, as I mentioned, is $10,000 deductible, and it does have a > 20% copay after $10,000, and it does have a fairly low benefit limit (I > forget how much, but it might be $100,000), but this would mean that a > large hospital bill of, say, $50,000 -- after rebilling, Mr. Bagget's bill > would have been quite a bit less than that -- would have cost us $18,000. > Not a pleasant experience, to be sure, but the kind of money that can be > borrowed if necessary. Since we are saving $12,000 per year on insurance, > we would be, really, only out $6,000 more than we'd have been by buying > that generous insurance. And I've never had *any* hospital bills for > myself. Of course, I'm getting older.... Well, I never had any hospital bills either, until my kidney cancer. There was no reason to expect it, because I don't engage in any of the known risk factors (smoking, drug use, working in toxic environments, etc.). I did manage to get the hospital, urologists, imaging, and anesthetists to put me on monthly payment plans. I did get a discount from the anesthetists for early payment, and it was a whopper discount: 40%. They must not get paid in full very often, so they automatically take less if they get it NOW. I paid off the urologists and imaging according to schedule, and paid the hosptal ($19K) according to schedule for about a year, and then paid the remainder in a lump sum just to get that last monkey off my back and get a tax deduction for last year. I'm not rich, but I am fortunate that I could afford to do that. You may ask "Ivan, if you could afford pay off your medical bills early, what the hell are you bitching about?" I can't help but feel sorry for the people who can't afford medical care. I myself was worried for a while that I might not be able to afford it, and my potential for affording it is much better than most people in the U.S. How much more they will have to worry! Something must change; the current system is broken. I heard on the news last week that medical insurance rates went up 28% last year. And the total number of uninsured Americans rose to 49 million (from 45 million a year earlier, I think). I don't know the current Census figures, so I just going to assume a U.S. population of 300 million. A reduction of insured from 256 to 251 million is about a 2% drop. A 2% drop in insured population for a 28% increase in insurance rates. I bet these supply and demand curves are non-linear. My prediction: if this trend continues, in a few years these curves will cross. Once the insured population drops at a percentage rate faster than the increase in insurance premiums, the medical profession will go into tailspin, going down in flames. Now, didn't I say earlier that medical care doesn't follow the law of supply and demand in the usual way? By that, I meant it doesn't follow the "textbook" examples, which are reasonably linear supply and demand curves. With medical, we have a demand curve that stays fairly flat even as the price curve trends up exponentially. But at some point it becomes impossible to scrape together any more money to pay, and the demand curve abruptly turns down. This happens rather quickly. Insurance companies respond to their shrinking customer base by raising rates on the remainder. Which causes even more people to drop their insurance, which causes another rate increase...and so on. We know this as an unstable feedback loop. I think this is what is going to happen in the medical industry. > In California, we had Kaiser insurance, which was *very* affordable, and > the service was good. Kaiser used to be in Massachusetts, but the heavy > regulation, it seems, forced them out. So I don't feel terribly guilty > about working the system! I'd vote in a flash for a single-payer system..... If by single-payer, you mean like what Canada has, I'm with you on that. The problem is, *we* don't get to vote on it. Our elected Congress members do. And they don't see the urgency of it, because they get their health care from the U.S. government. A better deal than you and I can get privately. And *we* cannot sue our HMO's if they deny us necessary treatment. And *we* aren't rich enough to afford more lobbyists than the HMOs. Yes, it's not enough to have a lobby, you must have the biggest, most well funded lobby. After all, if you are lobbying Congress in opposition to some other lobby, unless you have more resources than your opposition does, you've wasted your money, because the opposing lobby will win. My advice to anyone who has a choice of hospitals: choose a non-profit hospital if you can, and if it is known to be good. In Tallahassee, we have 2 hospitals, one for-profit (Tallahassee Community Hosptial, a.k.a. TCH) and one non-profit (Tallahassee Memorial Regional Medical Center, a.k.a. TMH). TMH is generally regarded as having better overall care than TCH. I have lived here over 20 years, and have observed more complaints in the news and from others about TCH. Well, how about that? I thought capitalism was always supposed to do things better! I was well cared for at TMH. I think in most cases, a non-profit hospital receives funds from state and/or federal government, and charitible donations. As a consequence, they are required to provide health care to anyone regardless of ability to pay. Of course, they can make it difficult on you and not be to eager to treat you if you don't have any money! For-profit hospitals don't have to treat you at all. If you stagger into the emergency room of a for-profit hospital, all they have to do is stabilize you, then they can ship you off to a non-profit. Of course, you may suffer more injury during the wait, but hey, they gotta make a profit... Best regards, Ivan Baggett Bagotronix Inc. website: www.bagotronix.com > Actually, that's not exactly the reason. The reason is that the insurance > companies negotiate lower prices from the hospitals. (The Capitol Hill > problems are real, but not the cause of this particular price difference.) > > (And my apologies to the out-of-US readers of this list; this problem is > peculiarly American, I think.) > > Now, you don't have to buy insurance to get the lower prices. First of all, > you can often negotiate after-the-fact for a lower amount, but I won't go > into details on that -- suffice it to say that a hospital may prefer to > accept a fraction of the original charge rather than going through a > complicated and failure-prone collection process. I.e., if they don't > accept the settlement, they might get little or nothing. > > Hospital bills also *commonly* contain overcharges of various kinds. > > But, more to the point, *before you get sick (and sometimes after)* you can > make the system work for you. Exactly how depends on the state in which you > live. > > When our insurance, for myself, my wife, and child, all healthy, went up to > $1300 per month -- we live in Massachusetts -- I did the research, and > found several things. > > First, under Massachusetts law, if you have *any* qualified insurance, you > can switch to any other insurance program, and not have to go through any > eligibility waiting program. So we got the very minimum insurance we could > find, $10,000 deductible, catastrophic care insurance. I thought, when we > got this, that we'd not see a penny from this company unless one of us were > hospitalized for something serious, but, hey, the insurance was only a > little more than $300 per month. That's a savings of $12,000 per year, > which would certainly be enough to cover routine bills! > > Then, if one of us gets seriously ill, we'd switch immediately to an HMO. > No delay. Expensive, yes, but better than paying high medical bills. > > (It turns out that they *do* pay some bills that are legally required to be > paid by insurance in the State of Massachusetts; they just paid for routine > immunizations for our daughter, for example.) > > The minimal insurance uses PHCS for processing claims. PHCS is a company > that serves large self-insurers (i.e., Private Health Care Systems); they > have negotiated rates, and most every physician in our area accepts it. > There is a modest discount, typically, on physician visits; but if it is a > visit to a specialist, the discount can be hefty. > > Now, you can join the PHCS network for quite a bit less, though Care > Entree, http://www.careentree.com/ > -- for our family it would run about $70 per month for the "Total Care" > program. We'd have no insurance at all; that is, we'd be totally > responsible for the rebilled services. But we'd be paying just what the > insurance companies pay... And that program includes a card that looks like > an insurance card, and -- we tested it -- it is accepted by providers as > one. That part of the program includes a Medical Savings account with a > minimum contribution, and medical bills are paid out of that account unless > the account is not sufficient. > > But by paying for minimal insurance, we can take advantage of Mass. law and > switch, if necessary, to a more generous insurance plan. Yes, it is insane. > But we'd be crazy not to take advantage of it. We can't afford the alternative! > > In another state, one could buy catastrophic care insurance and set up a > tax-deductible Medical Savings Account. We can't do that in Massachusetts > because it turns out that the insurance which would qualify for the tax > deduction at the federal level will not meet Mass. law for insurance. I.e., > it can't be sold here.... that's also insane.... > > Our insurance was sold through the Alliance for Affordable Services, it's > from Midwest National Life Insurance, and, yes, I checked, they are > licensed to sell insurance in Massachusetts.... which means that the > insurance keeps us qualified to switch at any time. Similar insurance is > sold by the National Association of the Self-Employed. Note that these > associations are closely related to the insurance companies, they are a bit > of a scam, but they also do sell real insurance (and provide certain other > services). Apparently, the Alliance is settling a class-action lawsuit > that, among other things, established clearly that, no, you don't have to > pay Association dues in order to get the insurance. (We weren't told that....) > > The insurance, as I mentioned, is $10,000 deductible, and it does have a > 20% copay after $10,000, and it does have a fairly low benefit limit (I > forget how much, but it might be $100,000), but this would mean that a > large hospital bill of, say, $50,000 -- after rebilling, Mr. Bagget's bill > would have been quite a bit less than that -- would have cost us $18,000. > Not a pleasant experience, to be sure, but the kind of money that can be > borrowed if necessary. Since we are saving $12,000 per year on insurance, > we would be, really, only out $6,000 more than we'd have been by buying > that generous insurance. And I've never had *any* hospital bills for > myself. Of course, I'm getting older.... > > In California, we had Kaiser insurance, which was *very* affordable, and > the service was good. Kaiser used to be in Massachusetts, but the heavy > regulation, it seems, forced them out. So I don't feel terribly guilty > about working the system! 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