Screwing the Poor

And to add insult to injury, many of the guilty receive enormous public benefits in the form of income and property tax exemptions and Medicare funding. I have found in my experience of assisting relatives who have massive medical bills, that physicians are usually willing to cut their bills if you maintain willingness to pay something. Hospitals, however, are almost always totally unreasonable.

A few years ago, the IRS was coming down on nonprofit health care providers that were charging uninsured patients more than they charged insured patients. In essence, the IRS took the position that the differential in charges was inconsistent with their nonprofit status. I know from my own experience that this had some effect on the health care providers, since I mysteriously got a refund of the excess I'd had to pay over my insurance coverage for an unanticipated out of plan stay at a Cleveland Clinic hospital after the IRS started nosing about. There also were some class action lawsuits filed, some of which resulted in settlements. I don't know what's going on these days, though.

and in a lot of states its illegal (as long as you're talking about consumer goods as opposed to health care.) Personally, I'd rather get gouged on milk or flashlights than health care but that's just me.

That said, could there be some motivation for the health-care providers to be doing this other than straight-up greed? One possibility is that the insurance companies have wrung all the profit out of the business and the providers have to make up the lost margin where they can. That suggests to me that there will probably be something for health care providers to like in a successful health care reform package. It strikes me that the only ones that really benefit from the current system are the insurance companies.

They don't always charge more. Or at least that's not how it's always been. About 10 years ago I had a scary mole I wanted removed, but was told it would cost $1000. I waited a couple years until I had insurance, and my out of pocket ended up being about $1000 (mostly because my preferred doctor sent the mole for biopsy at a nonpreferred lab, being newly insured and naive, I had no idea I was responsible for finding a lab for my doctor). Even without that overcharge, I wouldn't have saved that much by being insured, and it was definitely much more aggravating. I think my insurance paid well over $1000 as well. And I just got a phone in January with a number which must have belonged to a woman with major medical bills. They kept hounding me no matter how many times I told them I wasn't her (I'm a man, and of a completely different ethnic background). Finally I told them "sure, where do I send the check? (I wanted a name and address to report them for harrassment and disclosing her private information). They were surprised and then offered me an 80% discount if I would pay that day (strange, since I didn't ask for a discount). Not fair, since it screws your credit history up, but what they charge and what they'll accept are not necessarily the same. Part of it is that doctor's offices routinely factor their aged receivables out to collection agencies. They inflate the price so that they can recoup what they need when they sell the receivable. But that's not socialist byzantine red tape, that's the majic market efficiencies.

When I had to go in and get my knee 'scoped, I inquired about the possibility of paying for it myself rather than have it go against my insurance, since we were in the process of switching plans and I wasn't sure if we wanted to take the hit on our premiums. I was quoted $37,000 for self-pay, combined hospital and surgeon. If I had it charged to my insurance company, they'd get billed $11,000. Same job, three times the price for cash payment (and even the 'cheap' rate was pretty outrageous for 30 minutes of outpatient surgery). Health care is and should be no more a market-driven concept than fire or police protection. It's a fundamental element of civilized society. Unfortunately, the real God of the US is the dollar, so you'll find too much resistance as long as certain Republicans...er...I mean 'people' - are around. My suggestion would be to institute a 5% payroll deduction, matched with a 5% employer contribution, the funds being assigned to the employee and/or his family to use in purchasing a local health care plan, with the doctors and hospitals being the ones offering the plans. THEN you have a market-driven health care program, but without the parasites known as Humana, Blue Cross, etc. Emergency care or life-threatening illnesses, it has to be understood, is not in the same realm as regular care or end of life care, and should be dealt with separately from a different fund. Obama needs to start pitching health care reform as a pro-business move, one which I'm sure most business people would be happy to embrace. Anyone who's ever sat down with an agent to try and figure out how to offer a health care benefit without bankrupting themselves knows what I mean.

I used to work in billing/claims at a doctor's office and there is a very good (or bad, depending on your view) reason people without insurance get raped per visit: it is illegal to change your fees for a procedure just because someone is uninsured. Which brings us to the next question: Well, why the hell are the prices so high anyway? Easy: Different insurers pay different amounts for the same procedures, so in order to get the most out of one insurer the doctor must jack up the price for all insurers to match the one who will pay the most (because charging different insurers different prices is illegal). Never mind that the rest of the insurers only allow a fraction of that price. In order to get the most money out of one payer, the price must be high for all. Now before you go lighting torches and chasing after greedy doctors, realize yet another fact. Even though an insurer may allow $250 as the "allowable amount" for a simple visit, they typically only pay a fraction of that depending upon whether you've met a deductible and whether you are in or out of network. So it's completely possible that out of the $250.00 claim, the doctor will get $25...or even $0 from the insurer. Who knows what the price of these procedures should really be, because the system already has a built-in incentive to inflate the price since the full price is almost never really paid. It's like if you went to the store and told the cashier you were going to pay AT MOST only 70% of the price of milk. If he's smart, he'll just jack up the price of milk so he can offset his loss.

The reason for this is sillier than you might think. The problem is that insurers pay a percent of the fee schedule, so if the provider wants $500 for a procedure and the average percent that insurers pay is 25%, the provider sets the fee at $2000. But if an individual walks in off the street, he is stuck with the fee schedule. Whatever the reason, this is a horrible side effect that hurts real people.

Kevin If you've read any of my comments here or at your previous gig, you know that I am mostly a free trader, but this is concept of such disparate prices is a practice that I also hate. One of the problems with health care is that you do not really have a free market operating at all. A free market takes educated consumers to work. Nobody really knows what is a fair price for a medical procedure because the price varies so much. I have a brother-in-law who is a doctor and he thinks this is ridiculous. The problems with health care I see are: 1. No one knows the true costs or what a fair price is. 2. People pay prices which vary sometimes by 1000%. 3. Same people that provide risk mitigation also negotiate the price. 4. People have come to expect that they can forget about paying health care bills. 5. Insurance is tied to employment. We do not need a national program to correct this. My ideas NATIONAL ISSUES - This issue is the only one which I think should be handled at the national level. It must be done this way because insurance easily goes over state lines. 1. Define two distinct businesses: a) Risk Mitigation : This is the classic insurance industry model. Many people pay into a common fund so that when one of them needs to be treated due to a CATASTROPHIC ( unplanned ) need ( disovery of disease, accident, etc. ) the funds are available for them. b) Club buying. People can bind together to have group buying power for elective procedures, pharmaceutical needs, annual exams... Use the power of the commerce clause and the US dept. of commerce to disallow any single entity from being allowed to be in both businesses at the same time. STATE ISSUES - These issues belong to the states. Nationalization of health care is I think a bad idea. I think a state strategy is much better. I really think smart liberals like yourself should stop trying to go for the big bonanza of National health care and settle with making some liberal state the model. 1. Allow any price to be set, but make it illegal to charge different amounts for the same procedure. 2. Provide a bare bones government policy which only covers catastrophic care. 3. Require all citizens to have health care insurance or accept the bare bones care. 4. Get back to thinking of medical bills as the same as any other bill, so people will not neglect them. Even I would go for something like this, and I am a staunch conservative. We simply have to break out of the current model where nobody really knows how much anybody pays for a procedure, all insurance is tied to workplace, and there really is no free market for health care.

$4,822 in hospital charges for a bag of I.V. electrolytes, a chest x-ray, and one night's stay watching TV and joking with the nurses. And the punchline: I've apparently reached an age--50--where a hospital seeks to protect you by asking a series of questions about your home life, which included the ironic, "Is anyone at home taking money from you against your will?" I said, "no," only because I couldn't predict the enormity of the bill the hospital would be mailing to my home.