In early 2011 my mother passed away. She was 94 and developed evidence of a metastatic cancer in her abdomen. She wisely elected to receive palliative care in her final months. She had marvelous care via a hospice team in Portland Oregon but did need a few procedures. Various billings have drifted in over the months. This posting is about the most recent one.
Those of us who are insured are likely aware that there are billed charges – retail, and the actual paid charges – wholesale and that providers who participant in various public and private insurance plans are accustomed to writing off the difference between the two. These differences are often impressive, but this most recent case was to me rather startling.
A bill came in from the non-profit Providence St. Vincent in Portland. It was for a non specified ‘outpatient procedure’. Total charges were $1,519.50. Insurance paid $320.08. Adjustments totaled $1,119.40, leaving a patient balance due of $80.02, which I paid.
Noteworthy in this matter includes the fact that the bill did not name the procedure, or indicate the insurance payer. My mother had both Medicare and a Blue Cross supplement from her prior employment as a teacher. Most noteworthy was the 74% reduction in allowed charges in this bill through the insurance carrier. It is reasonable to assume that an uninsured person would be expected to pay the entire amount of $1,510.50, or a person with another carrier would have a different percentage reduction.
What to make of the original amount? Is it reasonable or is it an amount that has built-in excess to allow for cost shifting due to the reductions in the bill my mother and others paid? Or does what was paid for my mothers procedure, a total of $400.01 more accurately reflect the work and value received? What should the cost of this unnamed procedure be assuming that every patient paid the realistic cost of their care in a given facility? What would this procedure pay in Canada, Australia, Germany or any number of industrialized countries with a private provider system and a nationally enforced payment scheme?
What about the startling lack of detail in this substantial bill? Would we tolerate a bill from the grocer for $100.00 that says ‘food’? Yet we routinely receive bills for far more that are equally uninformative from health care facilities and providers. As individuals and employers, how does this sort of scheme impact us and what is likely to occur assuming threatened Medicare cuts in the near future?
Assuming considerable cost shifting took place and is the norm, is this a rational and sustainable system and what direction is it heading? The other day, an appeals court overturned the mandated coverage component of Obamacare. Does this mean that many will continue to gamble with no insurance, and shift the cost to the rest of us?
What happens when an uninsured person comes into a facility like Providence needing care? They get the care and are not turned away. Then they get a bill for the retail cost. They either pay it, often at significant financial hardship, negotiate a reduced rate if they are savvy, or default on all or some of the payment. If the latter, it may be due to medical bankruptcy, indifference, or poverty. The cycle continues and the institution justifies further cost shifting to the private payers and commercially insured populations. This is a form of hidden tax on responsible companies individuals who buy coverage and on businesses who choose to insure their employees.
A system that routinely writes off 75% of the price of treatment for certain individuals is a sick system that is not being straight with us. Providence is a mission driven non-profit, which is not to suggest that they don’t generate serious cash flow and surplus, and pay significantly to their executives like the for-profit sectors. But alone, they are not capable of changing this situation even if they wanted to. How many of us would wish to work for or create a business where customers pay vastly different bills for the same service and what would our responses be. Airline costs come to mind here, but the difference is that in most cases we can decide not to take a given flight, and at least prices are posted for every flight option, leading to some real competition and relative price transparency. Health care costs are opaque and rarely considered or known in advance of treatment.
Those who think that our current health care payment system is working and should be left alone need only look at their next personal treatment episode to see the truth.
And one other lesson here: I have often made the point to the young healthy uninsured person who thinks that they can go bare on health insurance – that they can’t afford to; that one episode of hospital care would easily cost them in the 5 figures and that they would be expected to pay 100% of charges. I have suggested that they buy a high deductible lower cost policy, which nonetheless imposes a PPO discount on the first dollar of care, resulting in a marked discount on the ultimate bill they receive.
I suggest you bring this to attention of the Republican candidates. Even if they are against Obamacare on principals, how about coming up with a plan that will serve the general welfare of our country and not those profiting from an outdated system. I suspect healthcare will have to become a public utility with a parallel system for those who want more than “health stamps”. A true libertarian would just let people suffer the consequences of their unfortunate circumstances rather than have big government interfere with perceived personal freedoms and the right to profit off the misery of others. On the other hand, tell the Democrats to stop inefficient boondogles that waste money and allow exploitation by crooks. Will someone get it right!
As a medical professional, and also from personal experience, I am in agreement with the comments in “Our Absurd Payment System Personified”. As such, I vote for mandatory Health Care Insurance with help for those who need it to pay premiums. I do not feel those who gamble, smoke or have other addictions should be helped financially to pay premiums. Our country might be wise to do some financial planning/budgeting with those on low or no incomes. Otherwise, it appears those who have no health care insurance are treated for free or at a substantially reduced fee while those of us who have healthcare insurance end up payong not only for our own families by including it in our budgeting but also for those who have not budgeted or planned wisely to take care of their helath care needs. – B/RN
The core issue here is the separation of the recipient of the treatment from the payment for same up front. Can you name anything in life, besides medical care, that is treated as if the price is meaningless? Food, cars, phone service, housing, etc. are all bought with up front determination of the cost. So we all make decisions about what we will buy based on our ability to pay for it. Health care should be the same to the greatest extent possible. Medical savings accounts that belong to the individual along with high deductible catastrophic plans is the best means to accomplish that. That makes the individual responsible for good decisions about what treatment to receive and which doctor to see and to discuss the cost up front. Because of health insurance and Medicare we have been trained to not do that. Changing the culture will be difficult, but must be done.
I do not agree w/ mandatory insurance. First the federal govt does not have legal constitutional authority to do so. Second, I do not want to cede that much authority to the state either. We are free citizens, not subjects or serfs. Further, I do not want the state to force me to pay for the treatment of the risk taker who makes bad choices in life. I am for compassion on those who truly need help, but individually and collectively we do not have a bottomless well of money to support those who can care for themselves, but refuse to because they know we will. Just look to Europe to see that the entitlement mentality will end in bankruptcy and riots. And there is nothing compassionate about that.