Archive for June, 2011

Health Care: When facts don’t matter

22 Jun
I’ve found it difficult to engage in this conversation because most people, from any perspective, have built their argument on a foundation of ignorance. Having worked in medical management, I’ve got a perspective that most medical professionals and patients don’t have. I understand contracts between medical providers and insurance companies. I understand how Medicare and Medicaid work. I understand medical billing.  Having citizenship in two countries I also have a perspective that most people don’t share. Having had family members uninsured, on COBRA, personal insurance, group insurance, and government insurance, I have experience most people don’t.
Here’s some facts if you’d like to transition to a different foundation.
money and a stethescope
It’s a lie that only super wealthy can afford health care.
It’s simply not true. It may be that a doctor’s appointment cost someone $100. Now, we’re willing to pay that $100 to the cable company or the cell phone company. We’re willing to pay $100 to movie studios to watch and buy movies. Doctor’s visits are only for the elite in the same way that cell phones are for the elite: Not at all.
Here in Denver there’s a lot of offices geared specifically to those without a lot of money. The goal is to cut costs and ensure that everyone can get medical treatment. Offices that aren’t geared toward that provide discounts of cash patients, payment plans, and service those who are on Medicaid – tax-funded payment for medical services for the poor.
Cost of care in America
Those with insurance typically see the Explanation of Benefits (EOB) from their insurance company and are shocked at the original bill from the medical provider. A typical EOB reads something like:
Lab work. Billed: $3,000. Insurance discount: $2,994. Insurance paid: $6.
We walk away with the assumption that if we didn’t have insurance, we’d have to pay the list price of $3,000. It’s not true. Here’s a secret about how insurance payments work. Bureaucrats behind Medicare (tax-funded medical payments for the elderly and disabled) have a list of accepted medical procedures and how much the government will pay for those procedures. Each accepted procedure has an associated Current Procedural Terminology (CPT) code.  The base Medicare payment rates are so low, they don’t even cover the doctor’s expenses in seeing the patient. Medicaid (tax-funded medical payments for the poor) pay even less. Medical practices enter into contracts with insurance providers, that boil down to something like: “For covered procedures, we’ll pay you Medicare rates plus 15%.”
When the government or insurance payer receives a bill of CPT codes and associated charges, they validate whether the CPT codes are covered, and then pay the contracted rate or the billed rate: whichever is less. Because of this, it doesn’t matter whether they get billed $10 or $10,000 for a blood draw, they’ll only pay the contracted $9.54. The problem is if the billed amount is lower, say, $8, they’ll just pay that. So medical offices mark up the price of everything really high to prevent under-billing.
Cash-paying patients often can pay even less than insurance if they’re up-front. Insurance doesn’t need to be billed, the doctor doesn’t have to wait weeks or months for payment.
Sometimes our medical bills are still high. I recently heard someone angry that they paid over $100 and only saw the doctor for a few minutes. They whined. A lot. But  here’s what that $100 likely paid for:
  • receptionist (scheduling the appointment, placing reminder calls, etc.)
  • nurse and/or medical assistant (the person who checks your vitals before you see the doctor)
  • filing clerk (there’s a lot of laws about how medical records are handled, filing clerks track the files and have to go through training on how to handle records – that training is another expense paid for)
  • doctor (the doc only saw the patient for a few minutes, but spent time reviewing the patient’s history, writing up notes for the medical records, possibly writing referrals and prescriptions, etc.)
  • medical malpractice insurance
  • facility rent
  • medical equipment
  • lab work
  • the debt created by taking on Medicaid and Medicare patients
  • medical disposal costs (there’s special ways – that all cost money – to dispose of various things)
  • billing staff, especially if the patient didn’t say he was cash-only and pay up-front.
Cost of care in other countries
Meanwhile we have experiences or hear stories of cheap health care in other countries. A friend of mine recently went to a hospital in Asia and paid $5.  Reviewing the list above of what has to be paid for, did the hospital really provide all those services for $5? That would be less than 50 cents for each item on the list. $.50 for the receptionist, $.50 for the medical assistant. $.50 for the doctor. $.50 for lab work.
No. The doctors are not living off 50-cents per-patient. The medical bills are just being paid for by another source, and the patient has no idea what the actual cost-of-care was. In many countries, that payer is the government.
  • The government decides what treatment you can have.
  • The government decides when you can have the treatment.
  • The government simply raises taxes to pay for the treatment.

This then makes a legal requirement that someone else pay for your medical expenses. When it’s all paid for through tax revenue, the implication is that tax payers are required to give their hard-earned money to pay for your medical bills. If they don’t? They’ll take away the tax payer property, or take the money forcibly from their paycheck, and in some countries put the citizen in prison for not paying their taxes.

The demand that someone else be required to pay your medical bills or go to prison is immoral.

International Medical Tourism

But what about all those people going to other countries for health care? What about Americans going to Canada for prescription drugs?

I used to live minutes away from the border of Canada. We took trips to Canada to buy certain things cheaper, and my relatives in Canada took trips to the US for certain things that were cheaper. Not only that, but it is normal behavior in Canada to go to the US if you need better or faster health care, and the Canadian healthcare system routinely sends patients to the US. American health care is part of the Canadian health care system, because America does certain things better/faster. It goes both ways.

Americans are traveling to India, Thailand, and other countries for significant medical treatments that are too costly in America. This is simple economics. Trousers in India may be significantly cheaper than in America. The cost of living is lower. They may have less government regulation to comply with. For various reasons, economies are different, and this has no necessary connection to the quality or accessibility of health care. Or pants.

These are the real problems with American health care

I do think America has the best health care – at least better than any other place I’ve had medical care, which is only about 5 countries on 3 continents. Here’s what the basic problems are that could be fixed very quickly:

  1. It’s easy to sue doctors. This means the cost of being a doctor goes up to may for malpractice insurance. This also means that doctors frequently do more tests and treatments than are necessary as an attempt to prevent a lawsuit claiming they didn’t do enough.
  2. It’s easy to collect big bills and then go bankrupt. It is the law that no hospital can turn a patient away. A Physician Assistant I know told me about working in a New York hospital where the same drunk homeless men would come into the E.R. complaining of chest pain every night. They were legally required to give a lot of costly treatment when the guys just wanted a warm place for the night. Others aren’t homeless, but purposely avoid paying for health care to later declare bankruptcy or otherwise avoid payment. This is equivalent of shoplifting, not paying for what you’re taking, and our legislators are the enablers. On the medical side, it’s costly to collect money that hasn’t been paid, and can take years.
  3. Insurance billing is screwed up. The insurance has a set dollar amount they’ll pay the doctor, but the doctor is still required to bill them with a dollar amount. The only reason why the doctor needs to bill a dollar amount is so the payer (government or insurance) can try to under-pay the doctor if the doctor pays less than the agreed payment amount. If this was not the arrangement, doctors and hospitals wouldn’t have to sky-rocket the list price of services, which is what causes people to stress about the cost of care.
  4. We need to take personal responsibility. I ought to be responsible for figuring out how my medical bills are paid. I ought not be responsible for figuring out how yours are paid. The majority of uninsured people already qualify for government insurance, but have never taken responsibility to sign up for it. We have a total aversion to personal responsibility and rejoice when we only have to pay $5 for a doctor’s visit. We’re simply rejoicing that we’re making a sucker of someone else who will be suck with the bill.
  5. Government regulation costs money. And everything medical is regulated. While payments to doctors aren’t increasing, regulations on medical practices increase ever year.



The story you could be watching is better than the one you’re in.

10 Jun

HBO: The story you could be watching is better than the one you're in.

HBO: The story you could be watching is better than the one you're in.

I just saw one of these HBO ads interrupting an old Doctor Who episode I was watching online. Here’s one of the videos:

YouTube Preview Image

We are told that we need to be the captain of our own ships, the writers of our own stories. Yet as we live life, seeking to star in our own stories, this ad resonates with a lot of people. Our stories are dull, boring, small, and irritating. As long as people choose to make and star in their own story rather than living as a player in a story bigger than themselves, this ad likely rings true: They might was well tune out their own story and just watch stories written to entertain them.

What story are you in?

(Quick edit: Here’s a blog post I found interesting on the subject.)