My husband and I got married in 1999. His profession is as a programmer/analyst for health care billing software for hospitals. When a patient is admitted to the hospital, this program keeps track of all the information about them from the day they were admitted to the day they leave, then it generates a bill to the appropriate insurance companies for reimbursement. He knows the ins and outs of health care medical billing.
There came a point where I was no longer insured and some friends of mine told me where I could get a reduction in the bill for any labs I had done, so this is where I went to get a blood test. I told them I was self-pay and later I got a bill for $525.00. I called the lab and asked them if this was the self-pay price, how much does the actual procedure cost? They realized they had mistakenly sent me the "insured payer" invoice. They corrected it, re-billed me, and I only paid $37.00.
I asked my husband why there was such a discrepancy between the cost to the insurance company and the cost to self-payers. He explained to me that the health care providers make agreements with insurance companies to accept only a percentage of the total bill as reimbursement. In order to recover their costs, they pump up the bill. I was billed the actual cost as a self-payer. I was glad I didn't have to pay the $525.00 but something just didn't sit right with me about the whole situation.
When President Obama started running for President and started campaigning about the continually rising cost of health care I started putting two and two together. Why was the cost of health care going up? Sure there were new advances in technology and some doctors and hospitals periodically got new equipment, but basically, health care practices were business as usual.
Cost vs Price
I finally figured out that the cost of health care has nothing to do with price other than for computing what to bill the insurance companies. The cost of my blood test was $37.00. The price was $525.00. In order for health care providers to get reimbursed for the cost, they must inflate the bill until the percentage they get reimbursed matches the cost. This practice then sets the PRICE for that procedure (or whatever it was billed for).
So what? My insurance will cover it.
This seems to be the way the insured see their coverage, and it is a valid perception, but here is the reality. Have you seen your premiums go up and were told it was because the costs of health care have gone up? WRONG. The price of health care has gone up. Who raised the price?...the health care providers in tandem with insurance companies. As these practices continue, you will see your insurance premiums go up.
The Uninsured
In my own past experience, I have found that private practitioners as well as many hospitals do not give self-paying individuals any discount. The health care professionals will tell you they have to do this in order to get enough money to cover losses from non-paying patients. In my very unofficial research about non-paying patients, I have averaged the information I have found represent about 7% of all patients, which roughly translates to about 7% loss in profits. I am sure there are regional differences for more or less.
They bill the uninsured the same as they bill the insurance company, so the uninsured are paying the PRICE, not the COST of their health care (remember Price vs Cost?). If my blood test had not been discounted and I had to pay $525.00, as would be the case in many places, that is a 97% mark-up to cover 7% of profit lost for non-payers. Talk about funny math! And remember, they can write off these "losses" as well.
All this seems like legal fraud to me.
One final note: My husband and I moved to Missouri and I have found the cost of health care here for the uninsured is quite reasonable through the University Health Care System, but this does not occur in places where these kinds of facilities are not available. This scenario concerning price vs cost does not happen everywhere, but it happens enough to drive health care prices up. Think about it.
What is your opinion? I would like to know. And what are the solutions?
You know, I never really thought about it before. Since I'm insured I never paid attention to what the costs were, or if I did, I figured my insurance would pay for it. It is screwed that the uninsured people end up paying for it, or they don't pay for it at all, while the insured keep paying higher premiums. The only ones that are making out are the insurance companies, everyone else is taking it in the butt. This really needs more attention. How could this not be fraud?
ReplyDeleteThe information you provided here is quiet interesting and very useful one.I dint know about this after I read the information you provided now i can understand about it. Thanks for giving such a information. Now I got a idea.Good work.Keep it up.
ReplyDeleteThe government should fix certain slabs and criteria for each type of test and more statutory controls over insurance companies to be taken up so that to a some extent this type of unethical practice of insurance companies of charging more price than cost can be controlled .
ReplyDeleteIt seems to me that the cheapest and easiest solution to this problem is to adopt a single-payer system like every other first world country. Insurance companies only care about profit so factoring in the actual cost of the procedure into its price is counter-intuitive for them.
ReplyDeleteFrom Gopcolumbus I think that is so true. They inflate the prices a lot to match how much they want to make. Health care is just soo expensive these days. In some 3rd world countries they offer a cavity filled for only $20 but in the US it's about $800
ReplyDeleteReally....this is an eye-opener article for me.I had never ever thought about this.The article clearly shows the tie-up between healthcare professionals and insurance companies.Lot of people should read this.
ReplyDeleteThat is an insane discrepancy in price! It's also interesting that once you moved to MIssouri you found that prices were more reasonable; it really does matter where you live in terms of pricing. I'm uninsured at the moment, but truthfully there was very little difference in price between when I was insured or uninsured. I mostly went only to the doctor for checkups, and the insurance companies only paid for a small fraction of the bill for that.
ReplyDeleteIn other scenarios, you hear of people (or insurance companies) being charged $87 for a single aspirin pill. It is much the same thing, and we are given much the same reason - we have to pay the costs to cover the nonpayers and the uninsured. I had no idea about the percentage, though.
ReplyDeleteI agree with the poster above - what we need is a single payer, universal healthcare type system, that will make our health less something to be traded about on the stock market, and more a matter of a human right.
The article has enlightened me. It has come as a shock to me to know the facts of the insurance company and the health care providers. However we have to live with health insurance and can't avoid it. I reckon the government is also involved in it as they make the guidelines for the insurance companies and health care.It will be better to check the treatment costs and then compare it with the medical bills. If there is a discrepancy, question it.
ReplyDeleteAmazingly you found the fact of insurance companies. you also unveil the situation of the insured companies that they do want only company's profit and not concerned with the hike up of the price.Basically insurance companies are not the cost bearer but only the middle channel.My opinion is for the client to find an insurance company having the good worth. The reason being such practice may be the more insurance companies and competitions among them. Government should take up this matter itself and license only companies having good working capital.
ReplyDeleteMore advanced country - more "advanced" health care system is. I'm not from US but same thing seems to happen here...
ReplyDeleteA1O1HQRD6TMY86. I've often wondered why an aspirin at the hospital is $12.00 when I can get a several years supply for that. I took my daughter to the Dr. for an annual exam. They did a simple "hand over the eye" exam. They charged the insurance company $87.00 for that. Something I could have done at home but I don't have the "authorization" to say my child's eye sight is fine. I completely get that the Doctors have earned the right to make good money. I don't think that they are the ones getting "rich" off of the poor. The more the government keeps butting in, the more they are going to find ways around them. I don't want to live in a country where it could take years to get a procedure done or one that rations health care but we need a better fix than the one the Obama gave us. But on another note, Americans need to put their priorities first. If people say they can't afford health insurance but they can afford a $100 fancy cell phone or a $300 car note, then they need to be slapped in the face. We need to quit relying on the government and others and start taking on our own responsibilities. Like you said, you didn't notice until it was coming out of your own pocket. And that's when it hurts. And that's when America will start waking up.
ReplyDeleteOh this is a topic I know all about. On top of all this, there are those of us who actually pay 100% of the premiums for health insurance, so AFTER the copay's, and AFTER the premiums, an enormous amount of our income goes to health care which we may or may not use in any given month or year. We pay roughly $1200.00 per month just to have health care insurance to protect us from price vs. cost.
ReplyDeleteIt is absolute robbery what the insurance companies and providers have collaborated to charge us for our health care. On a side note, enjoy the health care while you can, as when it becomes socialized...(and it will)...standards will go down. Pay for it now, while you still have choices regarding your care! I will post more on this later, as it is a hot topic for me, and it actually feels good to put my opinions out there, even if just for a rant!
This is a fantastic and eye opening article where we are able to know the difference between price and cost. We are actually fooled by these health providers by taking insurance, though we take insurance out of risk factors. The government should take some concrete steps into this matter and people should get educated about this flaw system.
ReplyDeleteIt's amazing just how much these insurance companies are getting away with. Considering we live in 2011, the advances in medical science should mitigate most of the costs.
ReplyDeleteWhile this is certainly an interesting argument, I feel that this isn't really the real reason that premiums have gone up. The problem is that the American healthcare system is deregulated and and physicians (primary care and specialists) operate as independent contractors who are looking to boost their earnings. The real problem is the delivery and payment strategies employed. Most physicians work on a fee-for-service basis where they are incentivized to work by quantity not quality.
ReplyDeleteWhile it is true that self-pay is always a little cheaper, your figures are a little alarming, and could it be more to do with the individual hospital than an indication of the system at large? Mind you, there is rampant fraud in the healthcare sector. After my recent trip to Northwestern Memorial in Chicago, I received a 25% self-pay discount.
Honestly though, there are so many crooks in the health plans and so few people on capitol hill that can do anything about it that it's quite a sad state of affairs.
Well technically, the "cost" is how much it costs the doctors to provide the test (this would be the cost of the needle, the labor involved, etc.) The "price" is how much the consumer is willing to pay for it. So, the $37 and the $525 are both prices. The cost could be $.05, it could be $5,000, but it doesn't have any bearing on what the consumer is willing to pay for it. What it will have an effect on is what the supplier (the doctors) will be willing to supply the test at.
ReplyDeleteIt's not fraud to have price discrepancies. It could be fraud if the companies have agreements as you say they are, and these are affecting their financial statements, and thus affecting their income figures. I'd be curious to see some health insurance companies financial statements.
"Cost" is the total amount of money required to perform health care to a patient, it may consist of several payments like doctor and nurses salary; cost of medicine, equipments, overhead and etc...
ReplyDeleteWhile "Price" is the sum of total costs plus profit plus inflation rate.
Since all the health cares in the country are provided by For-Profit Company, it is normal to see your price for health care is risng annually rather than lowering.
A great post with out doubt. The information shared is of top quality which has to get appreciated at all levels. Well done keep up the good work.
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