That’s how much my health insurance company boasted I’d saved through their efforts in 2014. Right.
According to my Health Statement, my medical bills totaled $66,564.88 last year. However, my incredible, superhero health insurance company swooped in and rescued me from such high costs by “negotiating” my expenses down to a manageable $14,844.11.
Seriously? Who believes this sort of fiction?
If the actual “cost” of medical care for my family last year — which involved two minor outpatient surgeries — was anywhere close to $66,000, then the medical providers would go broke by accepting a measly $14,800.
The fact that the medical providers agreed to the significantly lower compensation means that they’re still profitable at that level. The $66,000 figure is nothing more than a fantasy number that no one pays, but health care providers and insurance companies hang their hats on to make it look like they’re actually working for consumers.
When I do the math on actual dollars and cents, it shows that my insurance company is still rolling in profits.
As I said, my insurance company shows that it squeezed my health care providers until they agreed to accept more than $50,000 less than what they billed. What is not clearly spelled out is that, of the $14,844.11 of allowable costs, $2,227.40 came from me in the form of deductibles. The insurance company only forked over $12,616.71.
That might seem like a hefty sum, but I paid $20,148 in premiums last year, which means the insurance company made a gross profit of $7,531.29 off of my account alone. That’s more than 37%.
What did I get in returnrn for this fabulous contribution to the well-being of my insurance company?
A premium increase!
To keep my stellar policy that “saved” me 78% of the billed cost of care, I was informed that I would have to increase my monthly payments by 23%. I guess a gross margin of only 37% was just too thin of a spread for them. They had no choice, really. My premiums just had to go up to keep the whole enterprise afloat!
When I received the premium notice last year, I did what anyone would do. I went shopping. Using the handy HealthCare.gov website, I found a policy that would fit my needs and would cost a little less than my old policy. Granted, I was moving down from a “gold” plan to a “silver” plan, but that seemed OK.
Only, it wasn’t OK, which is something I didn’t find out until I went to the doctor.
In early January, I went to my family physician and proudly handed them my new insurance card. They proudly handed it right back and said: “We don’t accept this one.”
I was dumbfounded.
It was the same company as my old plan, and still the same type of plan (PPO), it just had different co-pays and deductibles. I explained to the administrator that I checked for my doctor on their website before I accepted the plan. She told me that while they do accept many PPO’s from that insurance company, they don’t accept my new one.
By happenstance, my insurance company has a physical location in town, so I drove straight from the doctor’s office to their office. The service representative asked what I needed. I explained that I needed a plan that covered my doctor and I showed her my new card. She looked at it and said: “Oh, yeah, that’s a great plan! But it doesn’t have many doctors in it.”
As a client who’d spent time on HealthCare.gov, time in the insurance company’s office, and time at my doctor’s office where I couldn’t see the doctor, I failed to see how this was a “great plan.”
Unfortunately, this story has no end. I switched around some coverage and, since it was still within the enrollment period, I was able to set up a different plan. But that meant canceling the existing plan that had been in effect for five days, and verifying cancellation of the plan from 2014, as well as paying for and securing the new plan.
If this sounds confusing to you, imagine how it sounds when I explain it for the fifth time to yet another representative on the phone because the insurance company can’t get it right.
All of this makes me wonder: “What do regular people do?” When I say “regular,” I mean people who don’t have a flexible schedule like I do, so they can’t choose to spend 90 minutes on the phone arguing with customer service, or can’t shoot over to the local insurance office in the middle of the day, and don’t have the time to peruse HealthCare.gov and other sites collecting information.
Can regular people be expected to jump through all of these hoops and fight with their insurance providers to drive down costs? Is it likely they will even try, or just simply roll their existing plan to the new year and hope for the best?
The entire industry is filled with incentives that drive everyone to crazy extremes.
Doctors are motivated to slice their care into smaller and smaller pieces, where something as simple as a shot is billed as the supplies (syringe, needle, gauze, etc.), the medicine, and the act of the injection. While they’re at it, why not charge for the “prep,” which would be swabbing the area with alcohol, and “post-injection services,” where they could charge for the Band-Aid as well as the act of affixing it to your arm?
Meanwhile, physician groups are encouraged to jack up the list price of everything so that their negotiated rates look better, even though the entire planet knows that the list prices are meaningless.
The problems I’ve highlighted here weren’t caused by the Affordable Care Act, but they weren’t solved by it either.
By subsidizing care for many millions of people, we’ve just added more customers to an industry that was already dysfunctional. We keep working on the cost of the outcomes (patients paying for care) without addressing the cost of the care in the first place.
This is just like another system we keep addressing backward: student loan debt. Instead of focusing on lowering the cost of college (as Harry talked about yesterday), we keep trying to find ways to ease the pain of loan payments.
Until we strip away all of the crazy things that go into pricing in the health care industry, we’ll never get a true reckoning of the costs of care. Without that, we won’t be able to make sensible changes before the boomers crowd the door at the doctor’s office complaining of all the ailments that hit when you’re in your 60s or 70s. If we don’t fix our system before then, there’s no telling how expensive the cure will be.
P.S. Sticking with a discussion of headwinds buffeting us, you’re going to want to read what John has to say…
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