Medical Pricing
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Ellen Pearsall recently wrote of the remarkable disjunct between what we think a medical service “should” cost and what our hospital says the price for that service is (“Something’s Wrong,” The Public Speaking, March 6.)
I imagine a lot of people saw the special edition of Time magazine featuring what I will call an investigative report by Steven Brill. One point it made clear is that every medical service provider has the freedom to set any price it wishes as its manufacturer’s suggested retail price (MSRP), a practice we are familiar with in almost every form of business. Brill went on to demonstrate exhaustively that those MSRP’s can amount to 10 times the cost of providing those medical services.
While “cost” is subject to debate, what is not subject to debate is that a couple of “customers” don’t pay MSRP and the rest of us should pay attention to why that is.
The first such customer is the U.S. government. Medicare spends a huge amount of time figuring out its view of what a medical procedure costs and offers to pay that amount and not much more. Take it or leave it. But of course, if you leave it for one patient, you leave it for all 44 million patients covered by Medicare and probably the 48 million other Americans covered by Medicaid and the 18 million Americans covered under military programs.
The others are a like-minded group of medical insurance providers. It seems those companies manage to haggle discounts of from 30 to 70 percent off MSRP pretty routinely.
If that’s how this market works — that the poor fellow who gets wheeled into the ER with no insurance is going to see a bill of $1,000 for a service for which Medicare pays $100 or an insurer pays $500. Who do you want on your side?
Bob Bramwell
Pinehurst
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Comments
TF121 2 months, 2 weeks ago
The USA needs to move to a single-payer healthcare model, quickly. "Medicare for All" would simply the whole mess. Healthcare insurance companies need to go away. There is no other viable option. Repeat: there is no other viable option.
JimHeim 2 months, 2 weeks ago
TF121, Nicely put. You've highlighted the one policy that would at a stroke improve American health care and solve most, if not all, of our fiscal problems.
And you are absolutely correct. There is no viable option. I have that on excellent authority.
You are also correct that Democrats have not been much help on this. It's painful to watch my side being so blind to a solution for a serious national problem. I spend a fair amount of time trying to get them on board. Your help is appreciated.
If we wait for Republican help we'll probably all die in ERs.
DaveyNC 2 months, 2 weeks ago
Once I found myself without health insurance (between jobs). My wife had a history of bursitis in her shoulder and it flared up during that time. We knew that a cortisone shot was all that she needed, so I started calling doctors to see what it cost. The first thing I noticed was that no one in the doctor's offices could quote me a price. They didn't know what an office visit with a shot would cost. Eventually, most of them settled on some form of "$200 deposit, plus x-rays/CT scan/whatever". Total costs ranged from $800 to as much as $1500. Ridiculous.
So I kept shopping and eventually got a real, live doctor on the phone. I explained the situation, he listened for a minute and then said, "Come on in, I'll do it for $160." We went, she got the shot, problem solved. I cut my own personal cost for this very routine procedure to 80% less than the lowest quotes I had gotten.
Point is, number one, it's silly that our health insurance is tied to our employers. Get rid of that, which Obamacare doesn't.
Number two, I shopped. Just like I would shop for a car repair or a plumber or some other routine need. I located a perfectly acceptable solution. Contrary to what many on the left seem to think, any grown adult in this country with a phone and a phonebook could do what I did.
Number three, the doctor had almost literally zero overhead costs with this transaction. A few notes in my wife's file. No insurance to file, no wait to get paid and he got paid exactly what he thought was a fair price. I mean, $160 for maybe 5 minutes of work ain't too shabby by any standard. Win-win!
Now, repeat that process a few million times and in short order, the doctor's front desk will not only be able to quote you a price for routine needs but there would likely even be doctors advertising $10 office visits.
Throw everyone except the most needy off government provided healthcare. Everybody establish an HSA and then buy major medical insurance. If you lefties just have to give money away to keep buying your votes, then let's go ahead and fund everyone's HSA with $2500 when they turn 18. Problem solved.
DaveyNC 2 months, 2 weeks ago
By the way, that whole process I described above is what economists call "price discovery". When markets are allowed to function as they should, it is relentlessly efficient in finding the lowest profitable price. We should try it sometime. Works great for areas that aren't heavily subsidized by the government, like most retail or the Internet.
pgericson 2 months, 2 weeks ago
Davey... that was a great story... suppose, instead, someone you cared for became ill and had to get to a medical facility ASAP... how, again would you price shop? Secondly, there are probably a large number who would agree with de-linking health care from one's employers. Its called a universal provider system, in place throughout Western Europe and Canada. Things are cheaper... everyone is covered... healthcare is provided for by government and paid for through taxes.
CNMT 2 months, 2 weeks ago
yes, pgericson, that healthcare is paid for by taxes...but the working people in those countries pay 45% or more of their income in taxes to cover that care. I can just imagine the reaction here if the government took 45% (or more) from everyone's income to fund healthcare and all the other services that they provide.
TF121 2 months, 2 weeks ago
FYI CNMT:
Canadian income tax rates for 2012 as follows:
First $42,707 = 15.00% Over $42,707 up to $85,414 = 22.00% Over $85,414 up to $132,406 = 26.00% Over $132,406 = 29.00%
TF121 2 months, 2 weeks ago
Sorry for the format problem with my prior post. Trying again, to be perfectly clear. . .
Canadian income tax rates for 2012 as follows:
Income up to $42,707 = 15.00% tax rate; $42,707 to $85,414 = 22.00% tax rate; $85,414 to $132,406 = 26.00% tax rate; More than $132,406 = 29.00% tax rate.
This data is from Deloitte; see: http://www.deloitte.com/view/en_CA/ca/services/tax/tax-publications/a43b93c62a563310VgnVCM1000001a56f00aRCRD.htm
That is all. . . .
DaveyNC 2 months, 2 weeks ago
pgericson, congratulations on being the first to ignore what I wrote. I'm guessing you don't fully understand what an HSA is nor do you know what major medical insurance is. If you will re-read my comment, I repeatedly referred to "routine procedures". That's what the HSA is for. You will also notice my reference to major medical insurance. That's for the situation that you describe. It's there to take care of the truly unexpected, non-routine events.
Please, read and consider before trying to shoot holes in something. This is essentially how insurance is supposed to work; paying for the unexpected. An annual checkup is expected and can be planned for. The flu or allergies can reasonably be expected. A car wreck or cancer can't be. Insurance isn't supposed to be used the way that we do it now, paying for the routine stuff. It's as if we expected our car insurance to pay for our oil changes or new tires. The way that we expect health insurance to work now is really as a pre-paid medical care plan. Turn in back into insurance.
Here, learn: http://en.wikipedia.org/wiki/Health_s...
DaveyNC 2 months, 2 weeks ago
Also, pgericson, your comparison to Canada is off the mark. Yes, they have this "wonderful", "free" health care system. So does pretty much all of Europe and other places. What don't they have, though? More to the point, what do they not have to pay for on their own?
Defense. Canada's military is tiny. They have a big brother right next door who would handle the heavy lifting if they had a problem. We wouldn't allow any hostilities on the North American continent and they know that. Most of the militaries in Europe are anemic with the exception of the UK. Don't misunderstand me, they are valuable allies and quite competent. But we would do all the heavy duty stuff were it to become necessary. This is actually quite good not just for Europe, it's good for the world. You may recall that in the last century, those European armies caused quite a problem for the rest of the world. Twice and almost a 3rd time in the Balkan War. We mostly are the ones holding down the fort in the Middle East.
So we could have had "free" healthcare or a powerful military. Post WW2, the world needed us to be strong and keep the peace, so that's what we got. Now the question is, is it wise to let countries with centuries-old grievances raise large armies or do we get "free" healthcare? Doesn't look like we can have both. I mean, the govt. already spends far more on healthcare and pensions than on anything else. I say we need to find a way to move some of that cost out of the government's hands and leave it where it properly belongs, in the hands of the doctor and his patients.
njc17 2 months, 2 weeks ago
Canada has a free medical program, IT DOES NOT FUNCTION very well, not enough doctors, weeks sometimes months waiting time for procedures, sometimes major issues are deferred and oftimes Canadians come stateside because of desperation for help. Obama has made shambles of the whole healthcare system, you folks need to read it sometime.
TF121 2 months, 2 weeks ago
njc17, Your statement is incorrect. Canadian healthcare is not "free." It is funded by tax revenue. Further, no such shortage of healthcare professionals up there, at least no more than here in the US, based on population. Also, no waiting for non-emergency care. That is mythology. Sure, some monied Canadians may come to the States for certain procedures; in that case, either they pay for private procedures such as cosmetic surgery. But the Canadian system will actually cover the cost of certain certain types of care administered in the US to Canadian citizens should the Canadian system be unable to render such care or do so in a timely manner. Know any Canadians? If so, please ask them what they think of their system. In short, they would not trade it for our approach.
njc17 2 months, 2 weeks ago
I'm sorry but it is far inferior and lax, poor in it's distribution. I despise socialism in any form medical, free handouts to the gimmee crowd. I stand by my statements.
TF121 2 months, 2 weeks ago
njc17, That is not socialism. You will participate in Medicare. You will participate in public education. You will receive the benefit of police, fire, and emergency service, among many other services, all made possible by our tax revenue. That is not socialism
Themis 2 months, 1 week ago
NJC-17 - good post!
DaveyNC 2 months, 1 week ago
Well, here is an interesting anecdote I just found about Canadian healthcare: "...an opthalmologist from Quebec I used to play hockey with would shut his practice down in the last couple of months of the year because the government refused to pay him for any more work. He moved down to Louisiana."
More here: http://goo.gl/Q0dH7
DaveyNC 2 months, 1 week ago
wdd101st, there is no free anything. Some states provide free college educations? Which ones? Those educations are paid for by taxpayers if they are "free" or extremely low, unless the professors and registrars and maintenance people in those places work for free. Someone has to pay them and if the tuition is "free" then the taxpayers must be picking up the tab.
It baffles me that people do not seem to grasp this. It's only "free" to the recipient, but it is hardly free.
I suppose that this lack of understanding is the key to why Democrats are popular. They are very free-spending with other people's money. I mean, who wouldn't want "free" education or health care? Shoot, there is even a record number of people now getting "free" food and housing.
Toda 2 months, 1 week ago
Health Care has become a political leverage point for those who we entrusted with "honest" approach to quality health care. So go shopping ... Like the old saying shop until you drop!
HERE'S YOUR LINK
Toda 2 months, 1 week ago
Paid Politicians ... by Tommy Davis
Toda 2 months, 1 week ago
Donation to NC Senator Jerry Wayne Tillman by Blue Cross Blue Shield (Employees)
LINK HERE
JimHeim 2 months, 1 week ago
Those who say that Canada's health system does not function well have no idea what they are talking about. I've spent a fair amount of time in Canada visiting their doctors. They like the system. It has its faults (as do all human systems) but overall their jobs are made better and their patients get better care.
If you want to pick on another country's health system, learn about it first.
We pay about double what Europeans (and Canadians) pay for health care. They get better results than we do and they live longer than we do. Those are simple facts.
I will be interested in the outcome when DaveyNC has a heart attack. A simple one costs about $100,000. It's tough negotiating a better rate from the back of an ambulance. How do you think that HSA is going to work out then?
JimHeim 2 months, 1 week ago
wdd101 and everyone else thinking that lawsuits are driving up the cost of health care - you are wrong. Look at Texas. The enacted tort reform a few years ago and there's been no measurable difference in health care costs. You'll have to try harder to prove your case.
DaveyNC 2 months, 1 week ago
Congratulations, JimHeim on being the second one here to completely misrepresent what I wrote. I never said that the HSA was for the catastrophic events. That's what major medical insurance is for. The HSA is for the routine, predictable things and yes, for paying deductibles.
It's just amazing; you guys can't refute the idea as stated so you restate it to something that doesn't even resemble the idea and then shoot that down.
Oh, and thanks for wishing a heart attack on me. You guys on the Left are all class.
Toda 2 months, 1 week ago
Jim ~ I have a friend who lives in Canada since he is Canadian no less. I understand that they have quality care there, albeit, for non-emergency procedures, there are long waits as much as 3 months.
Health Savings Accounts (HSAs') aren't taxed when used as a medical compliment. Paying down those High Deductions some as much as $10,000. The those generous insurance companies pay on a 20/80...as health care expenses continue to rise.
drefleury 2 months, 1 week ago
WDD: We do have a cap on punitive damages in NC for medical malpractice claims: North Carolina has a $500,000 cap on non-economic damages in medical malpractice cases filed on or after October 1, 2011. N.C. Gen. Stat. § 90-21.19 (Westlaw 2012) (as amended by SB 33). The cap applies in two ways: the total amount of non-economic damages awarded to any plaintiff against all defendants is limited to $500,000, and the total awarded to all plaintiffs against any one defendant for care arising out of the same professional services is limited to $500,000. The act does not state whether related defendants share a single cap. Beginning in 2014, the $500,000 cap will be modified every three years based on changes in the consumer price index. Id. There is an exception to the damage cap for cases of disfigurement, loss of use of part of the body, permanent injury, or death, if the acts or failures that caused the injury were committed in reckless disregard of the rights of others, grossly negligent, fraudulent, intentional, or with malice. Thus the exception requires both a high level of severity and a heightened level of culpability. The new law also clarifies that lawsuits against hospitals and nursing homes based on theories of corporate liability like negligent credentialing or negligent supervision are medical malpractice actions subject to the damage cap. N.C. Gen. Stat. § 90-21.11(2) (Westlaw 2012).
Punitive damages against a defendant are limited to three times compensatory damages or $250,000, whichever is greater. N.C. Gen. Stat. § 1D-25 (Westlaw 2012). The Supreme Court has upheld the constitutionality of his statute. Rhyne v. K-Mart Corp., 358 N.C. 160, 594 S.E.2d 1 (2004).
JimHeim 2 months, 1 week ago
DaveyNC - The deductible for catastrophic coverage can be up to $11,900. Few people have that much in their HSAs. As the middle class continues to fall into poverty, that's going to be a growing problem.
By the way there is no such thing as magic and mentioning a medical example can in no way cause it. Grow up.
hb007 2 months, 1 week ago
HSA is a health savings account that must be paired with a high deductible health plan, which is for catastrophic events. You cannot have a HSA w/ a high deductible health plan and another major medical plan, this would be dual coverage and in violation of IRS rules, nor can the HSA be paired with a non-qualified plan.
If one has a HSA paired with a $5000 deductible and they find themselves in the hospital with a catastrophic event, the plan has an out of pocket expense limit for the insured individual. So you fund your HSA with pretax dollars, up to $3250 for 2013 (can be funded by employer dollar as well as individual dollars). After your $5000 deductible is satisfied, there could be a 20% coinsurance. But, keep in mind again that there is an out of pocket maximum of $10,000.
With the new health care regulations, there are no lifetime limits. So if one does get catastrophically ill, they would be responsible for 5000 deductible, then 20% of allowable charges up to the 10k out of pocket maximum, then the insurer would cover at 100% for covered services for the rest of the plan year.
Also most preventive care is covered now at 100% regardless of where you go, so what incentive is there for anyone to choose a lower cost provider? Zero
What incentive is there for a hospital or provider to lower their charges? Zero.
Not to be a skeptic, but the amounts can also roll-over from year to year, with one developing a sizable HSA account and with the way this country and associated debt is being handled, I wouldn't be surprised if the HSA values were eventually taxed down the road...taxed and seized.
Not to be a downer or anything :)
DaveyNC 2 months, 1 week ago
hb007 has it right. The unused money in an HSA rolls over from one year to the next. If you start one young enough (I mentioned the age of 18, above) and contribute to it each year, by the time you are in your 60's or 70's you could easily have a couple of hundred thousand dollars in it. Consider also that this plan would drive down the costs of the routine needs and that money would stretch even further. hb007, I'm not afraid that they would be taxed but that they won't be around at all. If the Lefties get their way and we go single payer, they wouldn't be needed. Then, we would get the health care that they provide us out of their munificent hearts and be damn glad to have it.
It simply isn't necessary to have another government entitlement program when most of the problem could be resolved by simply getting the government out of the business and let people shop for health insurance and health care the same way that they shop for auto repair or auto insurance.
JimHeim 2 months, 1 week ago
DaveyNC - 401(k)'s work in much the same manner. Very few people put enough in for retirement. I see little to make me think HSA's will be any different.
Put me down for Medicare for All. A workable system.
hb007 2 months, 1 week ago
The government can't manage to agree on a budget, surely you jest with that suggestion of Medicare for all?!
JimHeim 2 months, 1 week ago
wdd - Even if you max out your 401(k) during your working years (as I did), you can get a nasty surprise at retirement time.
I started my first one when they were introduced and contributed every penny the law allows, though I didn't know about the cool stock tricks Romney used.
My fund lost about half its value during the savings and loan debacle, barely recovered in time to lose over half in the tech stock crash and was finally cratered by the housing bust and the stock market drop that accompanied it.
If I had to depend on my richly invested 401(k) for my retirement, I'd be living under the Pennsylvania Ave overpass. Lucky for me, the government takes care of Social Security and Medicare.
I think Medicare should be available for every American.
Toda 2 months, 1 week ago
"I think Medicare should be available for every American."
That all looks good on paper ... but when one is in the "donut hole" out-of-pocket expenses are considerably significant. As much if not more than 80% paid by insurance providers.
So those who think, Medicare is a "free" social program, consider all the costs.
JimHeim 2 months, 1 week ago
Toda - You make good points. Those who think we're trying to get a free lunch are sadly misinformed.
Health care is not cheap (though we could cut our costs in half with sensible measures), but lack of health care is vastly more expensive. We do our economic prospects no favor by ignoring that.
Toda 2 months, 1 week ago
Thank you Jim for your kind comment. Our health care system is broken through exorbitant charges and fraud. Several hospitals in NC had to repay millions for submitting false invoices to Medicare. At the root of the problem, was alleging overnight stays when in fact, patients were treated in ambulatory care.
Before long only retired military (TriCare) and government employees will have access to health care.
[1]: http:// http://articles.businessinsider.com/2011-03-21/markets/29994510_1_runaway-costs-healthcare-system-healthcare-costs#ixzz2NL91kvl3"
bdavis 2 months, 1 week ago
Everyone should read http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/ - I once thought local hospitals were to serve the community in a just and fair manner, eyes are open now. What happens next, who knows?!!
hb007 2 months, 1 week ago
I agree bdavis, everyone should read it. You think these large health systems, even small health systems are here to serve the community, but the larger they get and the more agreements they get with local providers, the more money they make and the worse it is for consumers. Even non-profits, your local nonprofits. Have you ever gotten a bill from the hospital and seen those itemized charges?