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devil duck

again with the fictitious health care costs

Following up on this post...

shalmestere is undergoing physical therapy for a knee injury last month, and I just got the first insurance statement.

For the initial one-hour visit, the charges add up to $790, which is paid for as follows:
$660.40 "insurance plan discount"
$109.60 "insurance plan pays"
$20.00 "customer co-pay"
$180.00 "not covered"
$0.00 "you owe"

I had to look up the difference between "insurance plan discount" and "not covered": the former is "treatments for which the insurance company has agreed to pay a little bit," while the latter is "treatments for which the insurance company has agreed to pay nothing," but the effect is the same: nobody is paying it.  So why do they bother billing for it in the first place?  Do they hope to actually get the whole $790 from uninsured patients, while getting only $129.60 (about 1/6 of the total) for an insured patient?

The second one-hour visit adds up to only $540, because it doesn't involve an initial exam.  The other therapies cost exactly the same amount as before, despite presumably taking longer (because there's no initial exam).  This time it's broken down into
$464.46 "insurance plan discount"
$55.54 "insurance plan pays"
$20.00 "customer co-pay"
$180.00 "not covered"
$0.00 "you owe"
This time the provider is getting less than 14% of their claimed total from us.  If 95% of their customers have insurance, and our insurance company is neither better nor worse at negotiating discounts than the average company, then the average reimbursement they actually get for this sort of visit is $98.76, which means their actual costs for this sort of visit must be somewhere below that.  So why not just bill everybody the same $99 rather than loading 27% of the costs onto what are probably the poorest 5% of the customers?

When you buy a gallon of milk, there's a price tag on the shelf.  You can see the price before you decide whether to buy it, and everybody pays the same price (although some may do it with food stamps).  I could imagine charging less (for necessities like milk and health care) to the people least able to pay, but what kind of cockamamie scheme charges MORE to the people least able to pay?

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It has occurred to me that making it illegal for providers to negotiate a discounted price for some payers (insurers) would go a ways to fixing this: the price on the bottle is the price on the bottle, and everyone pays it. If insurers couldn't negotiate a specific discount for their own customers, they would have to pick and choose from the list prices of various competing providers, and that would bring economic pressure to bear on reducing the list price -- the one paid by all customers, not just one insurer or even all insurers.

what kind of cockamamie scheme charges MORE to the people least able to pay?

Most market systems, actually. The more of something you can/do buy, the more might you have with the seller to negotiate the price downward. But the parties that can do that are the parties with more money to spend. Hence bulk discounts: if you can afford to buy a 12 pack at once, you pay less per item than the people who can only afford to buy one item at a time. Insurance companies negotiating with medical providers is the exact same principle as Costco: "we represent a huge union of buyers, buying medical care in bulk, so give us a collective discount."

It's the poor and unaffiliated who wind up having to pay retail, at their local corner store.
what kind of cockamamie scheme charges MORE to the people least able to pay?

Most market systems, actually. The more of something you can/do buy, the more might you have with the seller to negotiate the price downward.


Yes, of course; silly of me to even say such a thing.

Anyway, I'm totally with you on outlawing "negotiated discounts". There are almost certainly health-care providers -- maybe you -- who give discounts to their poorer patients or don't charge them at all, and there would have to be a proviso allowing them to continue doing so.

In order for a prohibition on negotiated discounts to work, there would also have to be a transparency requirement: health care providers must publish prices for their goods and services, in such a way that one can see the price before going to the provider for care. Which is a no-brainer in most parts of our economy; why is health care so different?

And there's a good pitch for selling the transparency requirement to the sentient wing of the Republican party: it enables individual consumers to make their own choices in a free market. (The non-sentient wing will, of course, oppose it because Socialism! Kenya! The SS breaking down your door!)

Edited at 2014-01-16 07:54 pm (UTC)
And if course if you are sitting there with a broken arm, you have a very limited amount of time to decide what doctor to go with and get into surgery before the bone starts to set the wrong way.
True, but you can't be any worse off having access to that information. And for non-emergency ailments, you could actually do some comparison shopping. At present, you go to the doctor or hospital and have no idea what it'll cost until weeks later.