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Why Medical Bills Are Killing Us
Posted: 21 February 2013 10:05 AM   [ Ignore ]
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Good lord this is depressing.  It’s like cell phone and cable bills only a lot more awful.

$77 for freaking gauze pads?  My brother bought some at Meijer for like 12 bucks.  Little wonder why poor, uninsured people like me put off going to the hospital until we’re about to die (or have died).  Huh?

America for the win!

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[ Edited: 21 February 2013 10:14 AM by Dead Monky ]
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Posted: 21 February 2013 10:33 AM   [ Ignore ]   [ # 1 ]
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The $100 aspirin pill..this is an old and frequently recycled story. The thing I find disappointing is that they rarely ever explain all the reasons why these bills are structured that way. They make it look as if there are just a bunch of greedy people at the hospital charging insane fees to see if they can get away with it when any reasonable person would have to know its more complicated than that.

The first thing to realize is that very few people or insurance companies ever pay what I call “the fantasy fee”. These are the fees a hospital or provider would love to get paid in their wildest dreams but in real life the almost never do. the vast majority of bills are paid by medicare, medicaid and other third party insurers who have their own fixed fee schedules that are a tiny fraction of those fees. The $36 venipuncture fee that pays for the services of the phlebotomist for example, in real life we get paid about $1 for that which doesn’t even cover the salary of the employee who is paid to perform that service. The $100 aspirin that you often hear about is usually reimbursed at a few pennies but more often these days the insurance company bundles it and pays nothing at all.

Those fantasy fees are an attempt by the hospital or other provider to recoup some of the money from self paying patients that they lose on deep discounts to insurers. Its not fair but it is business and its one of those things that would not happen if we had universal health coverage.

Another reason some of the fees seem outrageous is that insurer often reimburse in nonsensical ways. They may pay only $10 for a service that cost $100 to provide yet they might pay $100 for another service that only cost $1 to provide. In order to make up for services that they lose money on providers have to try and get the maximum reimbursement on services where they might be overpaid. Its basically a situation where we are forced to charge high prices for everything and see what sticks because it would be financial suicide to do anything else.

There are other reasons of course for these fees. Hospitals are required to be fully staffed at all times even though the need for their services may ebb and flow. Some equipment is extremely expensive to buy and maintain and may only get used sporadically so those few patients who use it have to pay the full cost of the lease or the salaries of the nurses and doctors who may have been required to be on duty even when their services were not needed. Its just an unavoidable part of maintaining a medical facility People dont always schedule their car accidents, head traumas, births, and appendectomies.

There is of course a still a chance of over billing for services but with managed care that is very uncommon since the rates are set during negotiations between insurers and providers. The main issue these days is not exorbitant charges for individual services but rather the over use of those services in general.. to many tests primarily but too many treatments as well.

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Posted: 21 February 2013 11:25 AM   [ Ignore ]   [ # 2 ]
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Dead Monky - 21 February 2013 10:05 AM

...  Little wonder why poor, uninsured people like me put off going to the hospital until we’re about to die (or have died).  Huh?

Guess what? It doesn’t get any better if you’re NOT poor.  I work for a Fortune 500 global company, make a good living, and the only options for insurance at the supposed “group” rate through my company are high deductible options (unless I want to pay almost 800 a month for the “low deductible” option).  So I pay through the nose FOR insurance, but until I meet the deductible which is over $6k a year, I get absolutely nothing. It’s really double paying!  And on the off chance you have an emergency, which we did a few years ago, you still get to pay about $6k which isn’t covered if you’re healthy and haven’t gone to the Dr to chip away at the deductible already.  It’s lose lose all around. God Bless America!

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Posted: 21 February 2013 12:54 PM   [ Ignore ]   [ # 3 ]
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CuthbertJ - 21 February 2013 11:25 AM

Guess what? It doesn’t get any better if you’re NOT poor.  I work for a Fortune 500 global company, make a good living, and the only options for insurance at the supposed “group” rate through my company are high deductible options (unless I want to pay almost 800 a month for the “low deductible” option).  So I pay through the nose FOR insurance, but until I meet the deductible which is over $6k a year, I get absolutely nothing. It’s really double paying!  And on the off chance you have an emergency, which we did a few years ago, you still get to pay about $6k which isn’t covered if you’re healthy and haven’t gone to the Dr to chip away at the deductible already.  It’s lose lose all around. God Bless America!

There are two issues here. One is the cost of medical insurance and the other issue is simply that the more coverage you want the more you have to pay for it. You have gotten a lower rate on your insurance because you have essentially decided to self insure the first 6,000 dollars. There is nothing immoral or wrong about an insurance company offering that option. Its not double paying any more than it is when you have a deductible on your car insurance. You have simply elected to self insure part of the risk which for most people is a smart idea.

The cost of medical insurance is an entirely separate issue and one that a lot has ben written about. There are many causes but overuse of care is far and away the number one cause. Doctors order too many tests, patient request to many tests, and far too many treatments are given for problems that are untreatable either because they would resolve on their own if left untreated or because there is no useful treatment ( 90% of the z-pak prescriptions which are requested and written are a complete waste of time and money). Virtually everyone is playing a part in the cost of medical care, both the providers and the consumers. Until everyone admits their role and we address all those factors we wont be able to effectively reduce costs.

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Posted: 21 February 2013 08:09 PM   [ Ignore ]   [ # 4 ]
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macgyver, I’m not in any way challenging your statement regarding overuse of care, but I’m wondering if, or how, you see laypeople being able to affect the overuse of care?  I’ve heard the argument that people need to take responsibility for their care, but I, for one am about as qualified to weigh in on medical issues as I would be to critique nuclear reactor design.  In many cases it would usually be impractical for the medical profession to really educate a patient about their condition and the ramifications of different diagnostic measures or treatments even if the patient had the capability to digest the information.  So, if people like me don’t really have a deep, or even practical understanding of medicine, how do we know if we are overusing care?  If a patient challenges a decision and they don’t understand the basis of that decision wouldn’t that be insulting to the medical professional and risky for the patient?

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Posted: 21 February 2013 08:30 PM   [ Ignore ]   [ # 5 ]
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I disagree that its not possible to educate patients about the best way to treat or diagnose a problem. I spend a great deal of time doing just that. I don;t really think that’s the main issue though. In this day and age patients often search the internet before they go to the doctor. They also talk to friends and family. By the time they get to the office they may have digested a lot of information, much of which will be incorrect or inaccurate. Part of the problem is that we live in a “more is better” “early detection is everything” society that has people believing they need the latest testing for whatever ails them.

I come across patients who demand a head CT for a headache they’ve had for only 2 days. 50 year old men frequently come in with orders from their wife to get a stress test just because they are 50 even though this has never been approved as a screening test in healthy patients. Others insist on blood work that is not indicated based on their symptoms or situation. Usually I can educate patients to understand why they dont need a particular test but its a no win situation. Doctors like myself who take the time and go to the effort to educate and convince patients they don’t need a test have to spend more time with the patient and don;t get paid for the extra effort. They also stand the risk of angering the patient or their spouse and losing the patient. Worst of al if something happens 5 years later they will claim that if they had had the stress test they could have avoided the heart attack and a lawyer will have no trouble convincing an uneducated jury of just that.

Patients have a lot of influence over what a doctor orders. Its important that patients make it clear to their doctors that they are not looking for more testing and that they would rather be tested only when it makes good sense to do so. Without a doubt doctors are as much a part of the problem for the reasons I outlines above. I often tell residents that I work with that learning to become a doctor is a two phase process. Doctors spend their early training learning what tests to order, then they spend the rest of their career learning what not to order. Knowing what not to order is what separates a great doctor from a good doctor.

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Posted: 22 February 2013 05:34 AM   [ Ignore ]   [ # 6 ]
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What an hellacious thing to go through.

They should allow a patient to bring their own dressings, painkillers, syringes, IV tubing, etc.

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Posted: 22 February 2013 07:23 AM   [ Ignore ]   [ # 7 ]
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mid atlantic - 22 February 2013 05:34 AM

What an hellacious thing to go through.

They should allow a patient to bring their own dressings, painkillers, syringes, IV tubing, etc.

You would think that might be a smart solution but it will never happen. Nurses are under enough pressure to provide care in the limited time they have as it is. They can’t be hunting around in the patient’s own supplies to find what they need. In addition, if something goes wrong because the medication brought from home was mislabeled or tainted, or the IV tubing sterile package was broken the nurse, or hospital, or doctor will be held responsible. Uniformity is critical if you want to provide care that is efficient and as safe as possible. Letting patients bring stuff from home introduces to many variables.

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Posted: 22 February 2013 09:21 AM   [ Ignore ]   [ # 8 ]
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IMO one of the major things that have driven the cost of medical insurance in the US to the current crazy levels is R. Regan making so called “consumer choice” mandatory.  Before this when you worked for a company they made the choice for a single carrier to cover their entire workforce.  The premium they were paying to cover hundreds or thousands of employees gave them substantial leverage against the ins. cos. that individuals can in no way achieve and they had personal assigned to ensure that the coverage was adequate and not overpriced.  The last contract I helped negotiate the cost of insurance for the 1300 men & women and their families was slightly over 1.2 million per year or approximately $925 per year (in 1982 dollars)  now the amount I pay for monthly coverage that is not as good is $8742 in todays dollars, and that is the least expensive I can get.  (Fortunately my employer pays 70% of this).  The individual doesn’t have the leverage nor the times or skills tom fight this rip-off.

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Posted: 22 February 2013 10:33 AM   [ Ignore ]   [ # 9 ]
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As you are each pointing out, the high cost of medical care is multifactorial. It is true that in medical insurance business as in all businesses there is a volume discount. There is power in numbers so that a company with thousands of employees can certainly negotiate a better rate than an individual can. This is obviously something that would improve instantly if we had universal health care but with a private system its an unavoidable fact of life. It affects those of us on the other side of this equation too. as a solo practitioner I have virtually no negotiating power with the insurance companies. Physicians in my area doing the exact same work but who are employed by the huge local hospital system get paid on average 30% more for the exact same service because the hospital has the power to negotiate better fees. Its a fact of business life that you just have to accept as long as we allow the system of private insurance to remain intact.

Private insurance companies also add cost to the system because a smaller percentage of the dollars they collect go to medical care compared to a government run system like medicare. We would all be paying less if we didnt have to pay shareholders and executive staff at the insurance companies.

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Posted: 22 February 2013 11:08 AM   [ Ignore ]   [ # 10 ]
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macgyver - 21 February 2013 12:54 PM

There are two issues here. One is the cost of medical insurance and the other issue is simply that the more coverage you want the more you have to pay for it. You have gotten a lower rate on your insurance because you have essentially decided to self insure the first 6,000 dollars. There is nothing immoral or wrong about an insurance company offering that option. Its not double paying any more than it is when you have a deductible on your car insurance. You have simply elected to self insure part of the risk which for most people is a smart idea.

If I pay $500/mo for insurance AND I pay $500/mo to my doctor because I haven’t met the huge deductible, I’m double-paying.  If I only incur $5999 in a year, I’ve paid $6000 to the insurance company, and $5999 to my doctor. From the standpoint of my pocketbook, I’ve paid $12,000 for 5999 worth of healthcare.  Worse yet, the insurance company has done nothing or worse than nothing to earn that money. It’s a legal scam.

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Posted: 22 February 2013 11:46 AM   [ Ignore ]   [ # 11 ]
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CuthbertJ - 22 February 2013 11:08 AM
macgyver - 21 February 2013 12:54 PM

There are two issues here. One is the cost of medical insurance and the other issue is simply that the more coverage you want the more you have to pay for it. You have gotten a lower rate on your insurance because you have essentially decided to self insure the first 6,000 dollars. There is nothing immoral or wrong about an insurance company offering that option. Its not double paying any more than it is when you have a deductible on your car insurance. You have simply elected to self insure part of the risk which for most people is a smart idea.

If I pay $500/mo for insurance AND I pay $500/mo to my doctor because I haven’t met the huge deductible, I’m double-paying.  If I only incur $5999 in a year, I’ve paid $6000 to the insurance company, and $5999 to my doctor. From the standpoint of my pocketbook, I’ve paid $12,000 for 5999 worth of healthcare.  Worse yet, the insurance company has done nothing or worse than nothing to earn that money. It’s a legal scam.

question

You do understand how insurance works, right? And why it’s good to have?

If you have a high deductible, that will reduce your monthly payment. But the high deductible has a downside: you have to pay the deductible. If you don’t want to have to pay the deductible, choose a plan without it. You will, of course, then pay more upfront.

The reason it is good to have insurance is in case you have some catastrophic illness or injury. If you get cancer, you may have paid $6000 to your insurance company for several hundred thousand dollars worth of treatment.

That excess money comes from the payments made by healthier or luckier clients of the insurance company.

There is also overhead such as sales and profit, much of which wouldn’t be there in a completely socialized healthcare system. Unfortunately politics being what they are in this country, single-payer healthcare isn’t terribly likely.

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Posted: 22 February 2013 12:16 PM   [ Ignore ]   [ # 12 ]
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Doug is exactly right. I think people often don’t understand the concept of insurance. Here is another way you can look at it. When you have a deductible you have basically broken up your medical insurance into two parts. one part covers the first $6,000 in expenses and the second part covers everything else. You could purchase insurance to cover both parts and maybe it would cost you $4,000 to cover the first part ( the first $6,000) and $6,000 to cover the second part ( everything else up to several million dollars) for a total of $10,000. In your case you have simply elected to buy insurance for the second part only. If you only use $5,000 in medical expenses that year you have to pay out of pocket for all of it because you didnt buy insurance to cover that portion. The $6,000 you paid for the second part didnt get used because you and your family were lucky enough not to have any serious health problems that went over $6,000 but if you had you would have been covered.

In a sense the argument you are making is equivalent to insuring your house but not your boat. If your boat then catches fire and you have to pay out of pocket for $5,000 in repairs is that double paying because you already paid $6,000 for your house insurance?

Don’t get me wrong. Im not trying to defend insurance companies. There are plenty of things they do wrong, but we need to focus the argument on the things they do that are actually immoral. This isnt one of those things.

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Posted: 22 February 2013 12:26 PM   [ Ignore ]   [ # 13 ]
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I think everyone is over-reacting.  That’s why we have the lottery people!  Play the lottery.  You could win millions of dollars. 
Then you won’t have to worry about health ins. anymore.
If you don’t have a casino nearby, I’m sure they’ll be building one soon.
Casinos and gun laws!  Far more important than a practicable health system.  It’s a good trade off folks!!

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Posted: 22 February 2013 03:59 PM   [ Ignore ]   [ # 14 ]
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Vyazma, here in PA the state runs the liquor stores, taxes cigarettes and has a lottery, the proceeds of which are supposed to go to senior citizens.  Perhaps if the state opened up brothels, (equal opportunity of course), we could have the proceeds go toward a single payer healthcare system.  If the states going to sponsor and profit from all of our vices, we might as well benefit.  Besides, sex is probably the least detrimental vice, (if you can even call it a vice), of the lot.

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Posted: 22 February 2013 05:39 PM   [ Ignore ]   [ # 15 ]
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Very apropo to what I was saying, this appeared today

http://www.latimes.com/health/la-na-medical-procedures-20130221,0,6234009.story

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