Health Care: For Example

Sullivan has been excellent on Health Care stuff this week. Here's a large chunk of a particularly remarkable email from one of his readers:

After about 3 hours I passed one of the [kidney] stones, and with a prescription for heavy-duty painkillers in tow, we left the hospital. Everything was fine until I received a bill 3 months later itemized as follows:

X-Ray: $765
CT Scan: $4294
Emergency Room visit: $4924
Total: $10063

The bill was a shock to me for two reasons. First, my insurance was supposed to cover this. After a long round of phone calls - during which a very rude hospital employee could not understand why I was upset at being charged $10,000 when I had insurance - I figured out that my insurance company's check had literally gotten lost in the mail. They sent another check and my bill was cleared. But this led to my second shock.

From my insurance company I received the following "explanation of benefits":

Total charge: $10063.00
Provider discount: $9571.00
Amount Payable: $442.00

How can something that would have cost me $10,063 cost my insurance $442.00 (not counting the $50 deductible that I chipped in). That's a 96% discount! To me, this shows two basic problems with our healthcare system.

1) Costs in our system are neither transparent nor fair.

I get that emergency room care is expensive, but a tray of bad lunch and a painkiller drip cannot cost almost $5000. I only saw the doctor for about 10 minutes total, and the nurse for all of 30 minutes. If I had been told that the CT Scan and the Emergency room care cost $5000 each, I'd have asked for a prescription and been off to the pharmacy. I wasn't told, however. I wasn't even give the option.

Further, the "Provider Discount" is jaw dropping. (Yes, I'll take the powder blue BMW 528i - only $2,000 with my provider discount!) My mother, who is a physician, told me that insurance companies are able to negotiate deep discounts by threatening to take their business (i.e. all the people they cover) elsewhere. This is something individuals can't do, so they get overcharged.

I've seen this repeatedly on lesser medical charges. Head-spinning.

And then there's this:

I work for a national insurance company and it's my job to pay hospitals and clinics for services performed. Now when I say pay, you should think of that in air-quotes. Assume it takes a week for the bill to be routed to the right person in the right department at my company. Once the bill reaches the right desk it heads back out. Because before we pay a bill we send it to a 3rd party company who reviews it to see how much we "really have to pay" for the services. This is because every state has different guidelines about what services should cost. This takes a week. Then the bill comes back to us, and if there are no issues with the hospital's records in our systems we pay the bill then.

However, if there are any issues it comes to me.

It's my job to call the hospital for updated tax forms (because it's not enough that we know their tax id, we have to have a government form showing the number). Then I send the records to another company who updates our database with the information. This takes another week, or longer if I have trouble getting a hold of the right person at the hospital.

Finally, we pay the bill. During this time the hospital has been waiting to get paid X number of dollars. Only instead we'll be paying them Y because that's what the state says is the minimum we have to pay.

So while your readers are being charged $50 for asprin; my company employs an entire department just to shuffle bills around while they decide what they will pay the hospital for that asprin.

I like my job, but I would gladly give it up if it meant that this insanity could stop.

While it's true that the plural of "anecdote" is not "data," I've found this whole series very thought-provoking.