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Burnett's Urban Etiquette

Monday, February 18, 2008

My Health Insurance Epiphany

I saw the light last week, though some of you may think I'm in total darkness by the time you finish reading this.

So I was sitting in a hospital waiting room for Mrs. B's doctor to come and tell me she was out of surgery - outpatient procedure from which she's recovered fine - and in the recovery room, and it struck me that I'm finally falling off the fence. I don't like the idea of universal healthcare.

Now, before anyone on the right of the political spectrum jumps for joy, let me explain: It' s not a political or partisan thing with me. If it was, I'd point out that the first close-to-universal healthcare system ever proposed in this country came from the late Richard Nixon, 37th president of the United States.

I believe many - maybe most - doctors do what they do because they care and want to contribute to healing folks. But human nature being what it is, I'm sure plenty of them also enter the medical field 'cause there are potential big bucks to be made. And when the average person thinks his enterprising spirit is going to be taken for granted or ignored he loses some incentive and some motive to try to outdo his peers. Trust me, if my bosses said tomorrow that the market size-plus experience-plus merit pay scale was being dropped, and that my salary would become the same as that of some guy who writes his condo association newsletter for $15 per week, I'd lose the fire in my belly. Sure, I'm in this business because I believe in what I do. But I'm human. I also want a good salary for good work. And I promise you a part of me would ask "what's the point" if that distinction in pay was dropped. The last group of people we want to stop trying to be the best is doctors. I like the idea of fixed rates being set for certain services, but we have to factor in quality. Better doctors with better skills and better facilities should be able to charge more than their weaker colleagues, I think. But the scale for medical services needs to be lowered all around, in order to make things more accessible.

So my problem is not so much with the costs of health insurance as it is with all costs associated with healthcare. I have a problem with medical suppliers and equipment suppliers overcharging hospitals and clinics and private doctor's offices, because those hospitals and clinics and private doctor's offices pass those costs on to the few patients who can pay for everything. And for those of us who can pay a portion, those hospitals and clinics and private doctor's offices, simply pass the high costs on to our insurance companies. So yes, I have a problem with $3 hospital bandaids, when they take five seconds to apply, and you can buy them 20 to a box for less than $5. I have a problem with $200 charges for a saline solution drip in an IV. I have a problem with $1,000 injections of anesthesia, $20 3-foot-long strips of ace bandage, $500 a night for "room and board" when you have to stay overnight in a hospital, $10,000 for 20-minute-long, barely invasive, non-life-threatening surgery.

Simply put, "things" like bandages and "relatively" minor services in hospitals and clinics just shouldn't cost so much. If I can buy those "things" in the civilian world for pennies their cost in a hospital, something is wrong, 'cause you know the hospital is buying those "things" in bulk. The cost of a strip of ace bandage in a hospital should be less than a buck. The cost of that salt water drip should be a few bucks. The cost of that bandaid should be a quarter.

What should be left to the free market is the actual cost of a specialist doctor's services. Doctors who are the best at what they do should get paid more than Dr. Nick from The Simpsons and other colleagues who graduated last in their class at the Tijuana Mail Order Medical College. That's only fair. Mrs. B's doctor? I've done my homework. He's been described by colleagues as a star among his peers. His work on Mrs. B has not led us to think otherwise. So I have no problem with him getting the big bucks. He's earned it.

Here's the rub: Everything associated with Mrs. B's procedure last week was covered. One hundred percent of the tab was picked up by our insurance company. Good, right? Maybe, unless you consider we pay the equivalent to a Volvo payment - a Volvo for which you put zero down - for our health coverage each month.

No, the way to make healthcare affordable for everyone is not to nix traditional insurance and give health coverage away. Let people continue to pay. But have them pay what's reasonable. And the truly poor among us? Well, what they can't pay in $$$ can be supplemented. Why not? That's essentially what Medicaid and Medicare do. Let's just expand those platforms to make sure that folks who can't pay for all their care get access to doctors.

That's my generic plan. And if you think I'm all wet, consider this: If those "things" and those simple services about which I wrote were actually more reasonably priced, then the health insurance companies MIGHT quit passing on to consumers the screwing they're receiving from hospitals and clinics and private doctor's offices, who are in turn being screwed by medical equipment suppliers and suppliers. And if that happened, my and Mrs. B's health insurance would probably only cost about as much as a bicycle payment each month.

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  • Like most people who complain about the high costs of medical care, you are completely ignorant of the costs.

    So was I, until I worked in the patient accounts department of a 200 bed hospital in Palm Beach County.

    The insurance companies demand a complete accounting of everything used in a patient's treatment. And I mean everything.

    Let's take that $20 ace bandage. It's what, $2.50 at your local pharmacy, right? Which means that the hospital pays much, much less because they buy in bulk. By all rights, you'd expect it to be cheaper. And the simple cost of purchasing it IS much lower; you're not paying for the cost of simply buying the bandage from the factory; you're paying for all the bookkeeping decreed by your insurance company.

    Someone has to document that it was purchased competitively at the lowest price. Someone has to document that it remained in a sterile package up until the procedure, and someone has to document that it was not only used, but used in a manner consistent with the insurance company's policies for its use. This means a ridiculous amount of inventory control; not only tracking, but extreme measures to control its environment at all times.

    And why to insurance companies insist on a ridiculous level of tracking? So they can refuse to pay for it. If at any time the inventory control chain is broken, they cross it off their list. Never mind that the thing was actually used, or that the procedure could not have occurred without it; if you don't account for it to the level THEY dictate, the HOSPITAL eats the cost.

    But it doesn't end there. Take sterile suture kits. Common equipment; it's not always needed, but must always be available during any surgical procedure, even if the plan doesn't involve sewing the patient back up. Maybe the incision will be small enough that a stitch isn't needed, but what if something goes wrong? So you need it on the tray.

    Insurance companies insist that the kit be OPENED during the procedure; their reasoning is that if something goes wrong, you don't want to waste precious moments opening the package to get to its contents. It also ensures that the kit won't be sent back and used in another procedure.

    But let's say you want to shave $20 off the bill; don't break the sterile seal unless it's actually needed. And realistically, it takes less than a second to rip it open. But if you send it back unopened, you have to remove it from the invoice. And what's wrong with that? It seems reasonable to remove an item that wasn't needed for a procedure.

    But we're not talking about reasonable, we're talking about insurance company petty bureaucratic meddling.

    If the procedure requires its presence, the insurance company demands to see evidence of it in the invoice; if you don't include it, they can reject the claim. And since the insurance company has a contract with the provider, the provider can't turn around and bill the patient. So the suture kit MUST be on the tray, and MUST be opened for the procedure in order to validate the claim.

    So the actual cost of these seemingly inexpensive items is driven up; not only by the need for excessive inventory control, but the need to have adequate storage for equipment that must be available even if it's not actually needed, and the extra costs of disposing of medical waste; most of this stuff requires special handling, it doesn't just go to the dump with YOUR garbage.

    No, working patient accounts in a 200 bed facility taught me that most of the cost overruns are directly attributable to policies dictated by health insurance companies.

    In my office, I had 150 different manuals from 80 insurance companies, each dictating how their patients must be handled. Every procedure, however minor, had to be vetted against those guidelines.

    Finally, you have to factor in the fact that most insurance companies drag their feet in paying the bills. Do you know what my actual job was at the hospital? Getting insurance companies to pay on claims that they had already agreed to pay. That's right, my full time job was getting money from companies who had pre-approved their patients, approved every procedure and piece of equipment, and who had even dictated exactly how much the bill would be, and STILL didn't settle the claim.

    You see, the longer they hold onto the money, the more interest they can collect on it. So they make policies to help them keep it; not only do they need the bill, they need the doctor's notes. And a form filled out by the patient. And a third-party evaluation of the procedure. And a Betty Boop post card.

    And remember, the longer they hold onto it, the less purchasing power it brings to the hospital. Every week the hospital has to wait on collecting on a claim, the hospital is losing about 6% of its original value.

    Get insurance companies out of the equation, and you will see costs drop. Medical care should be between you and your doctor, and not some soul-less corporation out to make dividends.

    By Blogger C.L.J., at 6:32 PM  

  • In a way, Healthcare overpricing bandages is like the "uncorking" fee of a wine bottle in a restaurant.

    My husband and I went out to dinner and had this marvelous bottle of wine ($59). We liked it so much decided to find it at the wine store - on sale for $9.

    The only difference is I can open my own bottle of wine at home, whereas can't operate on myself. So - healthcare has got you in their trap.

    By Anonymous Karmyn R, at 7:05 PM  

  • I feel as you do, but c.l.j. raises valid points. It's simply wrong by any ethical, moral or fiscal standard for our health care to be in the hands of insurance companies and not doctors.

    They fit every definition of evil I know.

    Glad Mrs. B's procedure went well.

    By Blogger heartinsanfrancisco, at 7:20 PM  

  • c.l.j. does raise valid points, indeed. In Maryland, Prince Georges Hospital, with the second largest shock trauma unit in the state, has closed its doors twice in the last year due to shortages of $12 million from it's budget. The law says that they must accept anyone coming into the Emergency Room, and too many non-paying customers use the Emergency Room as their Family doctor. Then, there's the Insurance Companys, as already noted.

    But we are having a more insidious problem. A growing number of doctors are not accepting insurance anymore. You pay them out of pocket, and submit their bill to your insurance company and get reimbursed yourself for using an out-of-network doctor. The docs have argued that they are getting paid less and less and can't afford it anymore. You can always go to a doctor that still takes your insurance, but these tend to be less than the best doctors. It's a real mess, and it's getting more expensive.

    By Blogger The CEO, at 10:05 PM  

  • Personally, I like the idea of making things more affordable, getting rid of the high cost and having state run medical aid rather than a federal program. However, I don't imagine states would offer equal treatment. I imagine all children should get immunizations covered since its mandatory to enter public school with them. I think you have great ideas and certainly have thought about this.

    I think with how the medical field is run today, doctors who graduated bottom are getting paid more than they probably should. THere is too much substandard care out there irregardless of the system. Maybe those doctors at the bottom shouldn't become doctors. Relagated to podiatry instead. Maybe.

    By Blogger My Reflecting Pool, at 11:47 AM  

  • I think I'll just try not to get sick.

    (kidding .... sorta)

    Personally, I don't think we can mandate the individual purchase of health insurance. That's what bothers me most about the concept of "universal health care."

    I would like to see all employers required to provide something, some basic level of insurance, though. I don't know how that could or should happen, but in my rosy-colored world, that's my fix.

    By Blogger SWF42, at 11:54 AM  

  • Not a bad idea. I like how Sens. Clinton and Obama favor bringing back a government agency, cut by the Gingrich movement, that evaluated health care quality and expenditures. We need more oversight of that sort of thing.

    Also, maybe teachers should be so incentivized.

    By Blogger M@, at 5:46 PM  

  • but where do you draw the line? The line between those who get help and those who don't? What do you tell the person who makes a small amount more - but enough to put him/her in the category that pays own way.

    By Blogger Pamela, at 8:57 PM  

  • As an American who now lives in a country with "universal health care," (Italy) I just want to be clear that it's not "free." When you work, you pay taxes into the system, so in a way, you *are* buying health insurance--it's just that even those who aren't working are entitled to it as well.

    (Plus, btw, a lot of tests and "extras" you have to pay out of pocket which can then be reimbursed through your tax return.)

    Also, you *always* have the choice of private insurance and private doctors (read: market-driven competition) too, if you can afford it and choose to go that way; you're not obliged to use the state system, but you're still paying into it so long as you're working.

    That said, because in Italy, health care systems here on a regional (i.e., like US state) level, quality of care *does* differ...mainly b/c of the people in charge.

    If given the choice, though, I'd choose a place where everyone is guaranteed care without the worry of going bankrupt for it. But the Italian system needs a lot of work where parity is concerned, so I would hope that if America ever goes the universal way, it will build on systems like Australia's and Canada's that seem to work better than the system here.

    By Blogger bleeding espresso, at 5:01 AM  

  • Writing as someone who's always known, & benefited from, State provided health care system (UK) - I think it's a Good Idea.

    You pay your taxes, on what you earn, everyone gets health care, free at the point of need, no fussing over whether you have the 'right kind of insurance', no waiting for the insurance companies to finally pay out! We all know insurance companies are only in it to make money.

    OK, so the NHS bureaucracy has become something ridiculous, & some hospitals are better/worse than others. But, on the whole, give me a health care system for all, & keep insurance for other things.

    By Blogger Bronchitkat, at 7:36 AM  

  • Add to all that CL explained, the fact that malpractice insurance and the costs of keeping a practice has also put doctor's expenses through the roof. So they have to charge more while their income -the source of their competitiveness- remains unchanged.

    Some doctors, the "stars", will always be able to charge a premium for their services for those who are able to pay. I haven't seen any universal healthcare plan that bans private practices or private health insurance. I'll bet many other doctors will be happy to earn a salary and work in universal healthcare clinics. Does that mean you'll get the quality of care you are able to pay for? You already do.

    By Blogger Alex, at 12:25 PM  

  • When my son was born we had to stay in the hospital for three weeks. It costs us 35,000 dollars. All I can say is, thank God I'm lucky enough to have good medical insurance.

    By Blogger captain corky, at 7:35 AM  

  • You've all made me think on this one. I might be changing my mine. More in the next post, which starts in 10, 9, 8, 7...

    By Blogger James Burnett, at 5:10 PM  

  • What are the various types of health insurance programmes that are available to me, and which is best suited to suit the needs of my family and myself? How do I choose the ideal health care plan? What are the major points that one needs to bear in mind while buying Health Care Insurance Policy?

    By Blogger Dallas Health, at 12:39 PM  

  • What are the various types of health insurance programmes that are available to me, and which is best suited to suit the needs of my family and myself? How do I choose the ideal health care plan? What are the major points that one needs to bear in mind while buying Health Care Insurance Policy?

    By Blogger Dallas Health, at 12:47 PM  

  • Hey-- I like your article, but beg to differ on a few points.

    1. Universal health insurance means that everyone has insurance, not that all doctors are federal employees or that you'll be in long lines for your flu shot. This can be done through a mix of public and private coverage, as is commonly the case in Europe, where it works just fine. See France, the Netherlands and Germany as prime examples.

    2. Universal health insurance systems of all stripes can be designed to reward quality, paying the miracle workers more than the Dr. Nick's of the world. Even the totally public NHS in the UK does this.

    3. Hospitals charge $3 for a band aid because they're covering the costs of all the poor saps out there without coverage who can't afford the $40,000 bill. Any hospital, public or private, would go bankrupt if they charged closer to their costs. In this way, we're already paying for universal health care, just in the least efficient way possible, and with some crumby health outcomes.

    4. Private health insurance costs more. They pass on the costs of their marketing, executive salaries and their staff that's busy denying your claims. Competition's done nothing to change that. The choice is to have the government decide what's covered based on medical evidence, or the private sector making decisions that pad their bottom lines. Where is it in their interest to provide you with fair, cradle-to-grave coverage? That'll always be secondary to their business interests. They'd be a dumb business otherwise. You can hardly blame them, given the rules of the game.

    5. Universal health insurance isn't "free". It isn't a handout. We already pay for Medicare out of every paycheck, and people like their Medicare. An additional tax to cover a totally universal system would likely be cheaper than the Volvo payment you're making in exchange for the frustrations of private insurance. Also, covering everyone lets the system treat people's conditions before they wind up costing a fortune in the ER.

    Look, we can mess around with complicated private solutions, and maybe come out with a system that works ok, but it'll never be cheaper than just giving Medicare for all, with the premiums coming out of your paycheck just like they do now for the private guys. The countries that have mostly private systems (see Switzerland) are always more expensive in terms of % of GDP than the public systems (UK, Sweden).

    Call it a tax, call it a premium. It's the same thing, only the tax will be less than the premium.

    Of course, we're free marketeers and want the maximum choice in any setting. I could see America going somewhere in the middle, where all the medically necessary stuff is covered publicly, but if you want a private room at the hospital, or some experimental procedure, private insurance picks up the tab. That's how Australia, France, and to some extent, Canada works. Most people have private insurance, but they don't need it to get decent, affordable care.

    We can solve this problem. There are a bunch of good options. We just need to pick one.

    By Anonymous grelican, at 3:19 PM  

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    By Anonymous Eliza, at 4:18 AM  

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