A perfect example of what is wrong with the Healthcare Private Market

[stuboyle]

Here is a perfect example of what is wrong with the Healthcare private market.

I receive a benefit statement from my health insurance company from a recent blood test my DW received. Here is a summary:

Total Charges Submitted $460.11
Allowable Charges $66.19
Insurance pays $59.58
I pay $6.61

So, if we didn't have insurance we have been charged $460.11 but because I'm insuranced with you typical mega corporation the lab only gets $66.19.

Where is the invisible hand that Adam Smith keeps talking about?

[Gregg]

I think "the hand" IS at work here, stu. I'm assuming you made the choice freely to sign up for your insurance plan (no coercion). I'm also making the assumptions that the lab freely agreed to accept that plan as a way to receive payment for it's product and that the insurer had predetermined and published what it would be willing to pay for that product. There may be an accounting/tax advantage to the lab submitting a $460 bill, but my guess is that they already knew how much they would be paid from you and from your insurer and they decided to sell their product at that price.

As it is your DW would be silly, economically, to go elsewhere for the test, but if you didn't have the insurance you do then you would have been free to shop around to find it cheaper than $460.11. As I understand it Smith's invisible hand talks of markets naturally stabilizing in terms of prices and available products, but it does not state that the markets become static or that stabilization will be a quick process. If state lines dissolve regarding insurance there will be all kinds of people jumping ship in high cost states, but I bet it won't take long before prices stabilize across the country.

[stuboyle]

@Gregg I guess I have to agree with you that for the parties that pay the $66 then "the hand is at work". In my opinion, it is not working for those who don't have insurance very well at all. There are 2 reasons I think this occurs that come to mind:

1) Lack of transparency - It's not necessarily easy to price something as complicated at medical tests. Its not like can go to eBay or Priceline.com to find the best deal It helps to have professionals (ie insurance companies) to find a competitive price.

2) Lack of competition - You have basically just a few labs competing so you have an ologopoly

As freein05 points-out, a lot of people pay cash and are still charged more. You think they should be charged less since they don't have to hassle with filing with insurance companies.

Now, I think there is a law which prevents medical providers from charging different customers different prices for the same service. So they charge everyone the same $460.11 to everyone, file with the insurance, receive the $66, then write-off the rest. While they have compiled with the law, they are violating the spirit of the law.

[freein05]

We had something similar happen. My DW had changed to a high deductible plan the first of the year and had not received her new insurance card when she saw a doctor. She told the doctor she did not have her card yet but because of the high deductible she would have to pay cash anyways. He was a specialist and the 15 min he spent with her in which he only went over test results would cost $197, for 15 min.

A week later we get a bill from the medical group for an additional $150. My wife calls them, they say the reason the the additional $150 is she does not have insurance. She told them she does have insurance and now has her card. They said to bring in her card and they will do away with the additional $150.

You would think someone paying cash would get the best deal but not in our private insurance world. The insurance companies have contracts with medical providers basically setting the price that even cash payers pay.

[IshbelRobertson]

Thankfully, I live in a country with an NHS!

[winterberry]

stuboyle and freein05, the stories you shared are outrageous. The only hand I see is the hand of greed.

Gregg, how many options do you really think the uninsured have? Shop around where? And what if they can't afford health care at any price?

Ishbel, how do your fellow citizens feel about the NHS? Here in the USA we hear stories about people in countries with an NHS who have to wait forever for treatment. I think those stories are blown out of proportion. I wouldn't mind waiting if it meant that my brother and my son would have coverage. Have you had to wait for treatment or ever been told that you couldn't have the treatment you needed? Is it convenient for you? What country do you live in?

[Gregg]

Gregg, how many options do you really think the uninsured have? Shop around where? And what if they can't afford health care at any price?

Let me be clear that I'm (mostly) just playing devil's advocate. But even with that in mind, the uninsured DO have options. The more money they have, the more options they have and anyone in this country has the right to shop around for their care. Just like where to buy jeans or a car or any service you can think of. Even people who are destitute DO have options.

My SIL is an emergency room RN. I don't know the exact percentage of patients that come to her uninsured, but she assures me it is a LARGE majority. I also do not know the laws and policies of other states, but in my home state if you walk into an emergency room you WILL be treated for whatever ails you. The uninsured around here don't get preventative testing, but they sure as he!! get care. Most of them don't pay for it. Not a penny. We all know who does pay for it. Please do not try to make it sound like care is not available to someone who needs it and to a whole lot of people who really don't. If you, the proverbial all of us "you" (not picking on you winterberry), don't think that is true I strongly suggest you head down to an emergency room near you and spend a little time observing what is going on.

[bae]

But even with that in mind, the uninsured DO have options. The more money they have, the more options they have and anyone in this country has the right to shop around for their care.

This is not strictly speaking true, because as I mentioned previously, the market isn't really functioning anymore to deliver services to end-user customers directly.

My resources for my recent adventures dealing with the health care industry were essentially unlimited. And yet, the products I wanted simply weren't available easily to an individual consumer, no matter what the price, unless one wanted to get really really silly and buy your own medical center.

What I see is a market failure.

I can pick up a phone and have a Gulfstream at the runway by my house in an hour, to take me just about anywhere, but try and find a specialist who can see you *right now* - it's tricky at any price, unless you know you have an issue considerably ahead of time, and can have minions line up ducks for you.

[winterberry]

My SIL is an emergency room RN. I don't know the exact percentage of patients that come to her uninsured, but she assures me it is a LARGE majority. I also do not know the laws and policies of other states, but in my home state if you walk into an emergency room you WILL be treated for whatever ails you. The uninsured around here don't get preventative testing, but they sure as he!! get care. Most of them don't pay for it. Not a penny. We all know who does pay for it. Please do not try to make it sound like care is not available to someone who needs it and to a whole lot of people who really don't. If you, the proverbial all of us "you" (not picking on you winterberry), don't think that is true I strongly suggest you head down to an emergency room near you and spend a little time observing what is going on.

Gregg, I am a nurse, too, and I know that anyone can get treatment. The fact that we pay for it anyway is a good reason to make it official. If poor people did get preventative care it would save all of us a lot of money.

A little over a year ago my brother, who is schizophrenic, almost died. His aorta dissected. He was flown by helicopter to the hospital where they did surgery on him that lasted over five hours. Post op he had every conceivable complication -- stroke, infection, bleed. He had to have a second surgery. He had a tracheostomy and a feeding tube. And he was not a cooperative patient. He kept pulling his tubes out. He really didn't know what was going on. He spent seven weeks in the hospital, three of them in ICU. For six weeks he had "one to one" care because he couldn't be left alone. His discharge planning was a nightmare for the social workers. No one wanted him. Finally he was accepted at a new rehab facility that needed patients. After a few weeks at rehab during which time he mostly slept because he was so heavily sedated, they sent him home. The social worker at the rehab was unable to find a doctor who was willing to be his primary care physician. After about fifty phone calls I found someone who would take him, but not right away. We have encountered one obstacle after another all along the way with trying to get his medications reordered and get him the care he needed when he was having drainage from his surgical wound. So, yes, he got care. Yes, the taxpayers paid for it -- I wish I knew how much, maybe a million? And yes, there could be a better way. Although the front end emergency care was there, the followup care wasn't. Which is why so many poor people just go to the ER for whatever ails them. They can't get the care anywhere else.

[Crystal]

Let me be clear that I'm (mostly) just playing devil's advocate. But even with that in mind, the uninsured DO have options. The more money they have, the more options they have and anyone in this country has the right to shop around for their care. Just like where to buy jeans or a car or any service you can think of. Even people who are destitute DO have options.

My SIL is an emergency room RN. I don't know the exact percentage of patients that come to her uninsured, but she assures me it is a LARGE majority. I also do not know the laws and policies of other states, but in my home state if you walk into an emergency room you WILL be treated for whatever ails you. The uninsured around here don't get preventative testing, but they sure as he!! get care. Most of them don't pay for it. Not a penny. We all know who does pay for it. Please do not try to make it sound like care is not available to someone who needs it and to a whole lot of people who really don't. If you, the proverbial all of us "you" (not picking on you winterberry), don't think that is true I strongly suggest you head down to an emergency room near you and spend a little time observing what is going on.

Depends on your area and the emergency room too. Big cities, impoverished areas -- they DO turn people away unless life threatening. And waits can be very long just to be seen. I waited with an uninsured relative for 2-1/2 days in a California emergency room a few years ago. Things have not improved since then.