Health Insurance is EXPENSIVE!!

[Gumbo4x4]

But, a big part of the reason that the cost PER treatment (which I agree is very high) is because there are so many people who are uninsured/underinsured and therefore the hospitals/doctors are forced to make their treatment costs exceedingly high to cover the people who don't pay at all. Another big part of the reason is that medical device costs and drug prices in THIS country are significantly higher than in other countries. Why do we pay so much more than Canadians or Germans for the same drugs? Hmmmm. Such a mystery.

All true & some of that would sort itself out if we had a better system. The 2nd half of your comment is one of the things that needs to get addressed on the front end, however.

 

[Gumbo4x4]

The thing is, without universal healthcare, the dog chases its tail. When medical providers and pharma companies are financially-unregulated for-profit entities, cutting costs is the last thing that they want to do. Then you add in the hospitals' habit of jacking up costs for the insured in order to cover their losses on the uninsured, and it becomes a self-fulfilling prophecy. The only way to truly control costs is to take the profit motive out of the equation. Countries with universal healthcare regulate the markup over cost that their suppliers can charge; if you can't live with that level of profit, then you don't seek the business.

I've got a lot of family in the UK and Ireland, and one them happens to be a surgeon in the NHS system. We have discussed the pros and cons many times over. One of the few places where he thinks that US practices are superior is in the adoption of private-rooms-only in hospitals, because it keeps down infection.

Not entirely wrong, but not entirely true either. There are ALWAYS reasons to cut costs even in a pure market environment because lowered costs = increased profits. Of course one of the issues is we don’t even have a pure market environment where policies can be sold across state lines.

 

[morgan98]

The thing is, without universal healthcare, the dog chases its tail. When medical providers and pharma companies are financially-unregulated for-profit entities, cutting costs is the last thing that they want to do. Then you add in the hospitals' habit of jacking up costs for the insured in order to cover their losses on the uninsured, and it becomes a self-fulfilling prophecy. The only way to truly control costs is to take the profit motive out of the equation. Countries with universal healthcare regulate the markup over cost that their suppliers can charge; if you can't live with that level of profit, then you don't seek the business.

I've got a lot of family in the UK and Ireland, and one them happens to be a surgeon in the NHS system. We have discussed the pros and cons many times over. One of the few places where he thinks that US practices are superior is in the adoption of private-rooms-only in hospitals, because it keeps down infection.

While I agree with most of this, I do not understand why people feel it is the hospital's responsibility to pay for those that can't. Hospitals have vendors to pay to, so someone has to pay for the services that all of those who cannot pay use. Many hospitals are not for profit entities, treat the uninsured and are going broke. That is why so many smaller hospitals and hospital systems are being taken over by larger medical systems. It is expensive to provide the care that people need. That is why, in my opinion, we need to be willing to accept a Toyota, not a Mercedes unless you want to pay for the upgrade out of pocket.

 

[robinb]

Meanwhile, back at the ranch......

We have a $6500 deductible. I'm not going to the doctor unless there's blood gushing from an eye socket or something.

We also went to a high deductible ($5800) plan because my DH's company is paying for a greater part of premiums. We ran the numbers and even if we had to pay out the entire deductible we would still be ahead of the lower deductible plan. I don't let that stop me from seeing a doctor though. I understand the mental part about not wanting to pay OOP for stuff but if I'm sick and need a doctor, I'm going. I had to go to Centra Care in Orlando twice on my last vacation and it was $192 for each visit *with* my insurance discount. If I didn't have insurance those two 20-minute visits (plus 3 hours of waiting) would have cost me $810 . It makes me angry that we pay and pay and pay for health care.

 

[Pea-n-Me]

But, a big part of the reason that the cost PER treatment (which I agree is very high) is because there are so many people who are uninsured/underinsured and therefore the hospitals/doctors are forced to make their treatment costs exceedingly high to cover the people who don't pay at all. Another big part of the reason is that medical device costs and drug prices in THIS country are significantly higher than in other countries. Why do we pay so much more than Canadians or Germans for the same drugs? Hmmmm. Such a mystery.

From the National Institutes of Health:

WHO BEARS THE COSTS OF UNCOMPENSATED CARE FOR THOSE WHO LACK COVERAGE?

Finding: Public subsidies to hospitals amounted to an estimated $23.6 billion in 2001, closely matching the cost of uncompensated services that hospitals reported providing.

Overall, public support from the federal, state, and local governments accounts for between 75 and 85 percent of the total value of uncompensated care estimated to be provided to uninsured people each year.

https://www.ncbi.nlm.nih.gov/books/NBK221653/

 

[morgan98]

I am certainly not an expert on the administrative side, but I am on committees that discuss a lot of things and sit in on many presentations, etc. And have for 30 years so lots of them, and I've watched the progression of things. There are separate budgets for operating costs and capital expenditures. Hospitals in cities also have a lot of wheeling and dealing with government, for instance they need to contribute back to the city in order to obtain an expansion, and things like that that are very complicated and longstanding. There are also big donors that often contribute greatly to the types of things we're talking about.

I think we have to remember that in the 90s, many hospitals closed their doors because of regulatory changes in the industry. Those who survived needed to figure out ways to contain costs, and they did. More recently they've had to figure out how to get people in their doors, and it's also a matter of survival - again. There's little doubt there will be more problems to face as we move forward. But I'll have to argue that the waterfalls and other niceties are a necessary part of operations in hospitals today in order for them to stay competitive. I can't really explain it better than that, but I know that it's not something done just for kicks and giggles. Patients can choose many places to get their care. And they are concerned not only for themselves, but for their families, and how convenient and nice things are for them, too. This is just how it is today.

Again, I am not doubting that these things are necessary in order to compete, I am saying because we want these things we are in essence driving up the cost of care. People need to own it. And no, if you cannot pay your bill and are uninsured you should receive good care, don't get me wrong. But waterfalls, hardwood floors and piano music are most definitely not needed. I understand there may be other benefits, but I would benefit from having a private chef too. We can't always have what we want. Budget and cost containment do matter.

*For the record, I am not in healthcare, but my husband just left he field after 36 years, part of it in an administrative role in a large urban hospital. I have heard these issues discussed, debated, watched him put together presentations etc. I am however in accounting , and do understand the budgeting capital and non capital expenditure, for profit vs. not for profit.

 

[Pea-n-Me]

Again, I am not doubting that these things are necessary in order to compete, I am saying because we want these things we are in essence driving up the cost of care. People need to own it. And no, if you cannot pay your bill and are uninsured you should receive good care, don't get me wrong. But waterfalls, hardwood floors and piano music are most definitely not needed. I understand there may be other benefits, but I would benefit from having a private chef too. We can't always have what we want. Budget and cost containment do matter.

*For the record, I am not in healthcare, but my husband just left he field after 36 years, part of it in an administrative role in a large urban hospital. I have heard these issues discussed, debated, watched him put together presentations etc. I am however in accounting , and do understand the budgeting capital and non capital expenditure, for profit vs. not for profit.

We will have to agree to disagree on it, then.

ETA I see firsthand the positive impact on patients that some of these improved facilities provide. Every day. And I hear it from families, too. People often can't fully appreciate the benefits until they themselves are in need of the services.

 

[Pea-n-Me]

While I agree with most of this, I do not understand why people feel it is the hospital's responsibility to pay for those that can't. Hospitals have vendors to pay to, so someone has to pay for the services that all of those who cannot pay use. Many hospitals are not for profit entities, treat the uninsured and are going broke. That is why so many smaller hospitals and hospital systems are being taken over by larger medical systems. It is expensive to provide the care that people need. That is why, in my opinion, we need to be willing to accept a Toyota, not a Mercedes unless you want to pay for the upgrade out of pocket.

I was with you up until that last sentence, lol.

 

[LSUmiss]

That’s certainly a piece of it, but it’s just barely scratching the surface. It’s not so much a volume of treatment issue (though again, reducing that helps), but a cost PER treatment issue.

And it’s so much more than this, but it’s also not just actual “costs” but what leads to costs like what drs & other lucrative health care professionals get paid. It’s not all specialties, but some are just down right ridiculous. I know there are so many things that inflate costs, but when you look at other places with universal health care that’s another thing that’s significantly lower.

 

[mi*vida*loca]

I work at a hospital and we take everything and anything. If you don't have insurance you come here and they know they'll get treated. We have a charity care department and a financial screening department. If you don't have insurance they try to get you Medicaid. If you don't qualify they try to get you to pay but if you can't you can get charity care. And if we diagnose you with something we must continue treating you at our outpatient offices due to "continuity of care." There is no such thing as saying NO.

We get grants from the state to cover the uninsured. But we also just built a 200 million dollar addition to our hospital with plans to build another addition since we are usually at full capacity with no beds. They try to make it prettier so the insured will come here instead of only the underinsured or uninsured.

 

[mom2rtk]

We also went to a high deductible ($5800) plan because my DH's company is paying for a greater part of premiums. We ran the numbers and even if we had to pay out the entire deductible we would still be ahead of the lower deductible plan. I don't let that stop me from seeing a doctor though. I understand the mental part about not wanting to pay OOP for stuff but if I'm sick and need a doctor, I'm going. I had to go to Centra Care in Orlando twice on my last vacation and it was $192 for each visit *with* my insurance discount. If I didn't have insurance those two 20-minute visits (plus 3 hours of waiting) would have cost me $810 . It makes me angry that we pay and pay and pay for health care.

That works if you're getting a good deal on the monthly premiums. We're spending a lot more already just to have the policy than we used to pay for our lower deductible plan.

 

[robinb]

That works if you're getting a good deal on the monthly premiums. We're spending a lot more already just to have the policy than we used to pay for our lower deductible plan.

I think part of the business process behind those high deductible plans is that you don't use them so the insurance company saves even more money. I always figure that deferred health care is even more expensive. I just came back from seeing my doctor's PA yesterday and I have developed pneumonia from the misdiagnosed flu I had at WDW (and paid $384 for the privilege). The Centra Care docs did give me some meds the second time for bronchitis and a double ear infection which helped but I still now have pneumonia. I'm sure that things would have been worse if I hadn't seen someone in Orlando and if I didn't call my local doc when I spiked a low grade fever again. I shutter to think about how bad things might have gotten if I had just decided to "ride it out".

 

[Pea-n-Me]

Insurers of Last Resort
Demand for uncompensated care is what Garthwaite calls relatively “inelastic”—it remains constant regardless of changes in healthcare supply. To demonstrate this, he and his coauthors Tal Gross of Columbia University and Matthew Notowidigdo of Northwestern University looked at 359 hospital closures from 1987 through 2000. Whenever a hospital closed, the uncompensated care costs for nearby hospitals rose significantly, suggesting that there was a nearly complete spillover effect. “Again, the cost does not go away,” Garthwaite says. “It’s passed on to the remaining hospitals.”

“Previously, it wasn’t clear exactly what kind of role nonprofit hospitals were playing. This demonstrates that they’re serving to fill in the gaps in the social safety net.”

The spillover arises because the Emergency Medical Treatment and Labor Act, passed in 1985, requires that hospitals treat all individuals in need of emergency care regardless of their insurance status.

The government does provide some compensation to hospitals for treating low-income patients. Most of it is in the form of Disproportionate Share Hospital (DSH) payments, which, according to federal law, are owed to any qualified hospital that serves a large number of Medicaid and uninsured patients. But the research shows it is not enough to offset hospital costs. “The DSH payments are less than the uncompensated care that’s provided,” explains Garthwaite.

Nor does the cost fall on those who hold private insurance policies, as many policymakers assume. “There’s this idea that hospitals simply pass on the costs of uncompensated care to privately insured patients by raising prices,” Garthwaite says—a phenomenon known as “cost-shifting,” which some have also interpreted as a “hidden tax” on all Americans.

“We show evidence that it’s not true. If it were true, we wouldn’t see profits fall—but we see profits fall meaningfully following an increase in the share of the population that is uninsured.” Beyond the empirical evidence, though, Garthwaite says it is not clear that hospitals could shift costs in the way many policymakers assume they do. “Hospitals are sophisticated financial organizations,” he says. “If raising prices would have made them more money, they would have already raised prices.”

Ultimately, hospitals are left to absorb at least two-thirds of the cost of all of this uncompensated care, the researchers estimate.

Burden on Nonprofits
Interestingly, nonprofit hospitals end up absorbing the bulk of this care. A majority of private hospitals in the United States—more than 70 percent—are nonprofit firms and therefore expected to provide a “community benefit” in exchange for tax relief. One key component of this community benefit is charity care for indigent patients. For-profit firms do not face a similar community-benefit standard.

This means that when there are changes in the supply or demand of healthcare services to the poor, most of the burden—in terms of uncompensated care costs—falls on nonprofit hospitals, a finding that sheds new light on the role nonprofits play in the healthcare industry. In contrast to what many believe, nonprofit hospitals are not simply for-profits in disguise. “Previously, it wasn’t clear exactly what kind of role nonprofit hospitals were playing,” he says. “This demonstrates that they’re serving to fill in the gaps in the social safety net.”

The authors note that this burden on hospitals should not be seen as a foregone conclusion that results from health care being a necessary service. “Grocery stores also sell a vital product that is partially financed by the government through food stamps,” Garthwaite says. “But grocery stores that accept food stamps are not required to provide ‘uncompensated food’ for people who aren’t eligible for food stamps or who have already used their monthly benefits.” In both cases—healthcare and food stamps—the government deals with private firms to offer this assistance, but only in the healthcare sector do private firms incur costs beyond what the government compensates for.

https://insight.kellogg.northwester...the-cost-of-the-uninsured-nonprofit-hospitals

 

[mom2rtk]

I think part of the business process behind those high deductible plans is that you don't use them so the insurance company saves even more money. I always figure that deferred health care is even more expensive. I just came back from seeing my doctor's PA yesterday and I have developed pneumonia from the misdiagnosed flu I had at WDW (and paid $384 for the privilege). The Centra Care docs did give me some meds the second time for bronchitis and a double ear infection which helped but I still now have pneumonia. I'm sure that things would have been worse if I hadn't seen someone in Orlando and if I didn't call my local doc when I spiked a low grade fever again. I shutter to think about how bad things might have gotten if I had just decided to "ride it out".

Sure. But either the money is there or it isn't. Our monthly premium is more than our mortgage now. So all the logic in the world won't put more money there to pay the cost.

And I agree. Ignoring health problems does cost more in the long run. We're not alone delaying medical treatment. As more and more people end up on barely affordable (or completely unaffordable) high deductible plans, more people will be technically insured, but not able to afford to actually access medical care. And I think there's an industry cost bubble coming as a result.

 

[Christine]

Another difficult issue for hospitals is observation vs admission status. Most people assume if you are in the hospital overnight you are admitted but that isn't necessarily true. Your status can impact reimbursements for both the hospital as well as the patient, particularly when it comes to rehab which is common for many elderly patients. (We found that out the hard way with my dad).

Often times patients in ER's can be waiting for a long time for a bed to open up elsewhere (maybe a rehab/nursing home/facility for mental health, etc) Hospitals and staff still devote resources and care to those patients but often times receive very limited reimbursement because of their "observation" status. It's quite a Catch 22 we've created.

My uncle recently had this issue. He had surgery on his spine that was supposed to be outpatient, but due to his other health issues and age, they made the decision not to release him. They kept him for 3 days and never really admitted him. No one really gave it another thought until they tried to get him into a rehab facility after the surgery. Medicare would not give him eligibility because the event that caused the need for rehab was not a hospital admission. The hospital ended up going back and redoing his recoding his stay because it was factually and admission but I guess in many cases they don't officially admit you.

 

[Pea-n-Me]

Re hospital amenities:

New England Journal of Medicine: The Emerging Importance of Amenities in Patient Care
http://www.nejm.org/doi/pdf/10.1056/NEJMp1009501

Do better amenities affect quality of experience and improve patient outcomes?
Do better amenities improve hospital volume and therefore strenghten its financial position?
ETA Do studies show that patients might choose amenities over clinical competence?
Lots to ponder, and not fully studied yet.

(See NY Times: How Does Your Hospital Room Make You Feel if link doesn't work.)
http://www.nytimes.com/2010/12/16/health/views/16chen.html

 

[Pea-n-Me]

My uncle recently had this issue. He had surgery on his spine that was supposed to be outpatient, but due to his other health issues and age, they made the decision not to release him. They kept him for 3 days and never really admitted him. No one really gave it another thought until they tried to get him into a rehab facility after the surgery. Medicare would not give him eligibility because the event that caused the need for rehab was not a hospital admission. The hospital ended up going back and redoing his recoding his stay because it was factually and admission but I guess in many cases they don't officially admit you.

This is becoming a more common problem. I experienced this type of "overnight stay after day surgery" myself. (Which was crazy after an extensive and complicated surgery!) Hospitals are incorporating more of these types of beds into their systems as insurance regulations change.

 

[NotUrsula]

Not entirely wrong, but not entirely true either. There are ALWAYS reasons to cut costs even in a pure market environment because lowered costs = increased profits. Of course one of the issues is we don’t even have a pure market environment where policies can be sold across state lines.

That's correct, of course. I guess I should have said "lower costs for the consumer". There's no profit in that.

I mentioned the business of "raising rates on the insured in order to cover the uninsured" because that is frequently cited by hospitals themselves and by insurance companies as a reason services are so much more expensive in the US. As for me, I really don't much believe that, as I am sure that they can get a large portion of it back via the government in one way or another, including tax write-offs by physicians. (I actually had a physician's office manager explain to me a while back that although they knew exactly what my insurance would cover and what the bill would be, they did not want me to pay my percentage up front, because they planned to discount it after the fact, and I would owe less. She told me that they deliberately did it this way in order to take a larger tax write-off.)

Also, there is a technical difference in the US between a "non-profit" organization and a "not-for-profit" one. Most hospitals that claim the status are technically not-for-profit, which means that they are very much allowed to generate substantial income over and above operating costs, though they are obliged to funnel it back into the organization. They have plenty of incentive to try to make as much money as possible so they can roll that extra cash back into the kitty for things like improvements and expansions.

Also, there is a lot of sleight-of-hand going in with regard to the whole in-network vs. out-of-network designation. I was in the hospital a while back for 3 weeks, and the illness that I had required 3x daily blood testing. This was a major regional medical center, not a small community hospital. I was in-patient, and the hospital was in-network, yet my EOBs showed a huge number of services performed by an out-of-network physician who I was quite sure that I'd never seen, and whose practice group I'd never heard of, either. I checked on this, and it turned out that he was the pathologist who was signing off on the blood test results. Now for the fun part: he ONLY worked in the hospital pathology lab; nowhere else, a straight 9-to-5 job. However, he didn't work FOR the hospital, he worked for a paper corporation that the hospital created to do its benefits management. I flat refused to pay the $6K in out-of-network co-pays that I supposedly owed for his services, and the insurance company eventually agreed with me. If the hospital was in-network and it was the only place that this physician worked, then he couldn't be out-of-network.

 

[morgan98]

Re hospital amenities:

New England Journal of Medicine: The Emerging Importance of Amenities in Patient Care
http://www.nejm.org/doi/pdf/10.1056/NEJMp1009501

Do better amenities affect quality of experience and improve patient outcomes?
Do better amenities improve hospital volume and therefore strenghten its financial position?
ETA Do studies show that patients might choose amenities over clinical competence?
Lots to ponder, and not fully studied yet.

(See NY Times: How Does Your Hospital Room Make You Feel if link doesn't work.)
http://www.nytimes.com/2010/12/16/health/views/16chen.html

Sigh....I am not doubting there are studies about how being in a more comfortable, soothing environment can somewhat improve clinical outcomes. What I am saying is does the added expense outweigh the slight improvement? And the point about people choosing amenities over clinical competence proves my whole point. The focus I want to see in on treatment and outcomes. If you want a luxury spa, book a spa. If you need to go to a hospital, you should want the best treatment possible. The two may not intersect.

 

[Pea-n-Me]

Sigh....I am not doubting there are studies about how being in a more comfortable, soothing environment can somewhat improve clinical outcomes. What I am saying is does the added expense outweigh the slight improvement? And the point about people choosing amenities over clinical competence proves my whole point. The focus I want to see in on treatment and outcomes. If you want a luxury spa, book a spa. If you need to go to a hospital, you should want the best treatment possible. The two may not intersect.

No need to sigh! It’s an important point!

Maybe that’s what you want to see, but it’s not necessarily true of everyone.

If physicians, researchers and other health profesionals are looking at this seriously, then maybe we all should be. Because aren’t improved clinical outcomes what we’re all looking for? There is a lot to be said for patients and their support systems having a good hospital experience. Lowering stress has well known benefits to everyone.