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re: Adam Ruins Everything- "Why US Healthcare is so Expensive"
Posted on 7/29/17 at 9:24 am to Roaad
Posted on 7/29/17 at 9:24 am to Roaad
That's a very oversimplified take, but the gist is mostly correct. Essentially insurance companies hold hospitals hostage. "If you don't agree to our discounted reimbursement rates (aka contractural adjustments), we'll take our block of patients to another system and make you out of network." The hospital is forced to either accept the rates and jack up prices so they don't lose money, or lose that particular block of patients. The more patients in that insurance plan in the area, the more negotiating power the insurance company has.
Hospitals are not allowed to adjust their billed charges based on whether or not a patient has insurance, so they are forced to jack up prices to overcome the discount that the insured patients get in order to continue being profitable (and stay open in most cases).
For example, if the true cost to provide a service to a patient is $1000, and the insurance company negotiates a %50 reimbursement rate for that service, the hospital has to adjust its billed charge to stay in the black. They may charge $2200, which would allow $1100 in reimbursement for a total profit of $100.
Along comes an uninsured patient who gets the same service. The hospital is not allowed to adjust its billed charge because the patient doesn't have insurance, so they get the entire $2200 bill. Now in reality, hospitals will usually settle for a much lower payment, but a lot of time won't tell you this up front. Some states have laws that prevent uninsured patients from paying higher than the average allowable cost (how much a patient with insurance would pay) in that area.
There's more than just this, such as adjustments for the percent of non-paying uninsured patients that hospitals are mandated to provide care for by law.
It's very complex. Here's a good article that does a pretty good job explaining.
LINK
Hospitals are not allowed to adjust their billed charges based on whether or not a patient has insurance, so they are forced to jack up prices to overcome the discount that the insured patients get in order to continue being profitable (and stay open in most cases).
For example, if the true cost to provide a service to a patient is $1000, and the insurance company negotiates a %50 reimbursement rate for that service, the hospital has to adjust its billed charge to stay in the black. They may charge $2200, which would allow $1100 in reimbursement for a total profit of $100.
Along comes an uninsured patient who gets the same service. The hospital is not allowed to adjust its billed charge because the patient doesn't have insurance, so they get the entire $2200 bill. Now in reality, hospitals will usually settle for a much lower payment, but a lot of time won't tell you this up front. Some states have laws that prevent uninsured patients from paying higher than the average allowable cost (how much a patient with insurance would pay) in that area.
There's more than just this, such as adjustments for the percent of non-paying uninsured patients that hospitals are mandated to provide care for by law.
It's very complex. Here's a good article that does a pretty good job explaining.
LINK
1
Posted on 7/29/17 at 10:39 am to stniaSxuaeG
People also don't understand just how expensive it is to staff and run a hospital or medical office. I did the books for a dental office - 2 docs, a hygienist, 2 assistants, 1 or 2 people at the front desk. This was in a low rent middle class suburb - just a basic practice in an old building. The overhead ran around $1,100/day. I can't imagine the overhead in a hospital or even an outpatient surgery facility.
The insurance industry tried to force the hmo/ppo thing into dentistry back in the '90s-early '00s, and especially the reduced fee-for-service type of plans where the insured pays a premium, the insurance pays nothing (even no capitation), and the dentist works for a reduced fee schedule. Dentists resisted this to a large extent, so you generally ended up with just a coule guys in town getting on all of these plans, scooping up all these patients (who no one else wanted), and then busting there arse to do shitty work on a ton of patients to make a living. Also many quit seeing medicaid patients because they were unreliable and the fees were too low. Hospitals don't have that luxury to pick and choose their patient base.
I'm not saying healthcare isn't overpriced, but it's not as cut and dry as it appears on the surface. I doubt that they are all just charging out the arse and printing money while the docs and hospital admins run around high fiving each other.
The insurance industry tried to force the hmo/ppo thing into dentistry back in the '90s-early '00s, and especially the reduced fee-for-service type of plans where the insured pays a premium, the insurance pays nothing (even no capitation), and the dentist works for a reduced fee schedule. Dentists resisted this to a large extent, so you generally ended up with just a coule guys in town getting on all of these plans, scooping up all these patients (who no one else wanted), and then busting there arse to do shitty work on a ton of patients to make a living. Also many quit seeing medicaid patients because they were unreliable and the fees were too low. Hospitals don't have that luxury to pick and choose their patient base.
I'm not saying healthcare isn't overpriced, but it's not as cut and dry as it appears on the surface. I doubt that they are all just charging out the arse and printing money while the docs and hospital admins run around high fiving each other.
This post was edited on 7/29/17 at 10:42 am
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