Monday, March 15, 2010

Observations on the Health Care Issue

I've been doing my best over the last year to ignore the flap about a national health-care reform bill. Not being one to believe that the federal government is the first best place to resolve serious issues, I tend to view the entire debate as being between politicians on the one hand who want to give my money to insurance companies and big nationwide hospital chains to take care of people, including at times myself, who are too careless or ignorant or just plain stupid to take care of themselves; and politicians on the other hand who want to give my money to oil companies, defense contractors, soi-disant security contractors, and a host of other international corporations to take care of people who have the intellectual wherewithal to take care of themselves.

So I am hardly the best source of opinion as to what, if anything, should be done to fix our national health-care system. However, I am in possession of certain bald facts that may have a bearing, however slight, on the extent of the problem, owing to the fact that, a couple of weeks ago, I was dragged against my will into the national health-care system, courtesy of what may or may not have been a heart attack.

Just after midnight on a Saturday morning I had to have the wife call for an ambulance. I won't describe what all went on, that being, frankly, none of your business. The aspect of the entire episode that does impinge on public debate is the cost associated with that ambulance ride, and with my subsequent hospital admission, treatment, and discharge.

I am covered for health care by a policy offered through my wife's employer, the federal government. The theory is that a large coverage group can negotiate a favourable price for services, and according to the various "Explanation of Benefits" notices I've received since the event, this group insurance has negotiated very favourable prices on my behalf.

There are four figures that are of some interest to the public debate: amount charged, plan allowance, benefit, and amount owed. I'm paraphrasing the nomenclature of these figures in the interest of clarity, but they boil down to this: a doctor or hospital bills the insurance company for what is, presumably, its "retail" price for the services provided. The insurance company has negotiated a lower price with the doctor or hospital, and that's the plan allowance. The amount the plan actually pays to the doctor or hospital is the benefit, and any amount not paid is what I owe, after insurance.

The insurance company has also contracted with the doctors and hospitals to provide that I am, in many cases, not responsible for payment of any non-covered amount; in essence, the doctors and hospitals are giving me a discount -- sometimes, as you will see, a very steep discount -- so they can participate in the overall insurance plan and ... I guess get lots of business?

Now, I don't have any issue with any of this. If doctors and hospitals want to offer discounts to group insurers, that's their business, and it is, at least in theory and adage, still a free country. My only concern is in the debate about the cost of health care in this country.

Here, then, the bald facts I promised: I've received four "Explanation of Benefits" notices so far: one for the hospital, two for the cardiologist's services, and one for the general-practitioner who saw me when I was admitted.

The GP -- the guy who acted as my personal physician, though only while I was hospitalized (since I otherwise didn't have a regular doctor) -- put in a bill for $140. This strikes me as a very nominal amount for professional services; if he'd been a lawyer he would have billed something on the order of $1,250 for the work involved in checking on me. But okay, $140 it is. And this amount is discounted to $96 and change, the amount my insurance plan allows and the amount it paid. And since he's a "preferred provider", nobody has to pay the other $44; I guess he makes it up on the next uninsured patient he gets.

Then there's the cardiologist. I don't know why there are two separate Explanations of Benefits, but no matter. One is just for "professional medical charge" -- I'm guessing here, but I think that's the doctor's time. That one charge is $105 -- again, far too little to my lawyer's mind, but I ain't complaining, just remarking. The discounted amount, paid by my insurance company, is a little over $73. I owe nothing, so the next uninsured clogged artery gets to make up the difference somewhere down the road.

The other Explanation of Benefits related to the cardiologist includes surgery, inpatient physician charges, and x-rays. These submitted charges come to $2,951, but they are discounted through contractual arrangements with my insurance company; the doctor gets paid $1,486, and I owe him a hundred bucks.

Last, but certainly not least, there's the hospital. Services listed here include medical care, drugs, medical equipment and supplies, lab tests, x-ray technicians' services, and surgery. I haven't gotten any bills from the hospital, so I have no idea what these various things entail. I presume, however, that every last aspirin and IV drip is covered somewhere, along with every inedible meal and probably even the Diet Coke the nurse gave me on the sly after telling me that the weak lukewarm coffee I was getting was decaffienated. God bless her.

Prescription drugs given to me in the hospital on Saturday, Sunday, and Monday total $5,582. Wow. If I had been asked, in my throes of agony, if I wanted nitroglycerine and morphine and a "GI Cocktail" and whatever else at those prices, I'd've had to think it over real hard, but considering the pain involved I might've gone for it. Luckily, though, my insurance company has negotiated real hard on my behalf, and the plan only allowed $1,837. The difference -- you guessed it -- is neither paid nor owed; it's made up for by the next uninsured ER admission funded through the public purse.

Medical equipment and supplies, whatever the hell that is, totalled $12,876. The plan allowance -- the amount the insurance company paid -- came to $4,237.  The other $8,640 goes on the public tab next time some uninsured person drops in for a visit.

X-ray tecnicians and diagnostic lab tests were billed at $12,408; the plan allowance was $5,892, and that's how much got paid. I owe nothing for those charges.

Finally, "medical care," which seems to me to be a sort of catch-all miscellaneous category, and surgery were billed at $33,529. Again, Wow. But what was paid -- the discounted price offered to members of my insurance group -- was $10,733. I owe a co-payment of $300; the remaining $22,496 will be made up on the next customer.

There are a couple of things that I find noteworthy. First, as I mentioned above, it seems to me that the charges for professional services are surprisingly modest, even before the discounts. Having been a professional myself, I'm curious as to why the market prices for professional services are such a small part of the overall charge. These guys need to raise their rates: not only do they have exorbitant student loans to pay -- or did have, at some point -- but I want my professional healthcare providers, my doctors and nurses, to be well-compensated for looking after my needs. It appears that they aren't, particularly. If the supposedly free market is working as it should, there are too many doctors in the world, or they have too little bargaining power in relation to other market actors (i.e., hospitals and insurance companies).

The other thing -- and this, I think, is the gist of the problem in our healthcare system -- is the exorbitant "regular" charges for services. I don't for one minute suppose that the hospital is taking a loss on my care, even though it's only getting about 32% of its "retail" charges. What it tells me is that the actual cost of providing three days of quality hospital care, with all the accoutrements, is something less than $22,700, and that the $22,700 actually paid includes a modest profit.

(The ambulance ride, by the way, was billed directly to my by the City at $579; I don't know yet what part of that the insurance company will pay.)

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