Sunday, December 31, 2017

Health Care vs Health Insurance

There is much talk about health insurance and even drug costs but so little about health care - quality or costs.

I have had individual health insurance for the last 17 years and for a few other scattered years before that. Most years I have been the insurance company dream client paying more in premiums than they paid out in coverage. One year I had a sports injury (sprain) with an ER visit. One year I had knee surgery and met my deductible but not the maximum out of pocket for the year.  This year was a bit more traumatic for me and more costly for the insurance company but because of insurance, it was limited in out of pocket expenses.

It also provided some data in terms of care and cost with and without insurance. I know that health insurance currently provides me with several things.
  • Coverage for certain preventive screenings and care as required by law.
  • A maximum out of pocket per year amount for health care costs. (and no annual or lifetime limits)
  • A reduced rate for the health care I need (and pay for myself) from in-network arrangements.
  • And as long as I keep insurance, coverage for "pre-existing" conditions requiring on going treatment (ie asthma).
Most (the exception being the variety of choice for and in the in-network provider list) of these benefits are better than the plans I had before ACA and just now (5 years later) becoming more expensive than what I had before ACA. I have said before, the ACA is not perfect. It was too complicated a project to get everything right the first time through. It needs some tweaking. But the past year's attempts to repeal and replace, along with all the calls from constituents demanding components stay around, confirm my opinion that there is more good in there than bad.

I think one topic being left out of the discussion is the cost of health care. It impacts those without insurance and it impacts the insurance companies. Even the not for profit insurance companies just trying to break even.

Many people recognize the maximum out of pocket limits. Many complain that even those limits are out of their reach especially on top of the premium costs. I wonder though, how many realize how much they save by being "in the club".  Take my annual checkup with lab work and stuff.  Most was covered by the plan. The insurance breakdown was
  • Billed: $498
  • Allowed: $255.69
  • Covered: $155.83
  • My costs: $99.86 (I had some additional "optional" labs).
Note that the original billed costs was almost twice the  "in-network" cost negotiated by the insurance company.

My ultrasound (not including the doctor review) was:
Billed: $755.00
Allowed: 275.90

This should be comparable to any xray or scan of a sports injury by an otherwise healthy person who thinks they do not need health insurance.  Without the insurance they would be paying 3x as much plus the costs of the ER visit and a Doctor review and exam. I just gained back a month (or more) of my premiums with the savings negotiated for that procedure.

Then there is the hospital bill for my surgery (not including the surgeon or the anesthesiologist)
Billed: $22,814.89
Allowed: $7,469.49

So really, the hospital can do the surgery for 1/3 the price? Does this qualify as price gauging the uninsured?Or is it a "discount everyone gets" so even a government employee is allowed to be billed the lower amount?

Government talks about drug costs being out of control but they rarely talk about hospital costs and equipment costs. A lot of the equipment costs, like drug costs, are related to FDA regulation, certification, and testing. I suspect there is room for improvement in the efficiency of those procedures. Meanwhile, the costs are set mostly by for-profit companies. Who can retain the best doctors? Can you pay the registered nurses enough to make the doctors look even better? How do we meet the requirements for sterile environments or obtain the most accurate diagnostic equipment? And for the hospitals, who covers the cost of the uninsured who default on payments? Rural areas may have only one hospital and no competition (which can both help and hurt).

Remember when buying a car was about who could haggle the best? There is a suggested retail price and a dealer price (which varied by dealer) and the consumer had to figure out how to find the best deal somewhere in between but few had the "dealer price" available when negotiating. Now it is pretty easy to find out the what others are paying and the negotiation window is smaller. In health care costs, the consumer does not even get to option to negotiate a price between the "billed" and "allowed" that I see on my insurance statements. We have to pick an insurance company (if we get a choice) and hope they are negotiating well with the pool of money they collect from premiums.

With so many private businesses and so little transparency, how can anyone find out these costs before a treatment? How can they shop around for the best combination of care and cost? It is only with the statements from my insurance company that I see these numbers and the huge difference in costs for the uninsured vs those privileged to have insurance. So people look at what they can see. The cost of the premiums and the amount they need to find if they have to pay up to the deductible or maximum out of pocket.

I'm not sold on single payer but I do wonder if letting private industry set the prices is still the best thing. If there were more companies (both providers and insurance companies) competing maybe it would still work. Medicare has some history of red tape, abuse of entitlements, and wasteful spending but overall and recently it is one of the best run insurance companies out there.  Unless government gets involved in more than just the insurance aspect, there is still a battle between the private business elements of health care (providers and equipment companies) and making sure essential needs are available for all humans (especially the children). Is there another option that hasn't been found yet? Will a better understanding (by consumer, business, and government) of the health care costs help find those options?
I have more questions than answers.
I will not, however, be taking advantage of the dropped "mandate penalty".
I will keep health insurance. It is worth the premiums to avoid the financial risk while stressed about ones own health.


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