re: What’s the point of medical insurance?

quote:

---

I had a brain tumor removed in 2014.

Bill was- $388,000

I paid $4000 out of pocket.

I think I'll keep paying for my insurance

---

While this is a good reason to have it, if you kept paying and we all stopped, your insurance wouldnt be worth a shite. It takes all of us not using it for it to be worth it for someone like you.

Let me explain. You doctor has a list price for the procedure, but that is a meaningless number just picked out of the air. It bears no relation to what the procedure costs or what your doctor would accept to do the procedure. Rather, in order to be "in network" the doctor has to agree to accept UCR [usual and customary rates].
So the doctor sends the bill to the insurance company, which runs the bill through the UCR black box and it spits out a number. This is what the insurance company pays.

quote:

---

insurance for healthcare is dumb.

---

until you spend a week in the hospital or have a major surgery

quote:

---

until you spend a week in the hospital or have a major surgery

---

You’re week in a hospital or major surgery would less by several orders of magnitude if it weren’t for insurance companies.

Let’s see what happens to your premium after that hospital stay or surgery.

You can pay now, or you can pay more later. Health insurance isn’t a deal…

quote:

---

Someone might have seen this, it was awhile back, but I want to say it was in Waco, Tx where an investigative reporter went to 3 different hospitals. I want to say two of them were only several blocks from each other, but they found out that for the same procedure, each hospital charged completely different prices. The cheapest was something like $2300.. The highest was $26k. I don't know if that is the exact numbers but there was a huge difference.

---

It's because in most cases it really is just an arbitrary number charged.


A hospital/provider/doctor etc. If in-network all have negotiated rates for costs of services with different insurance companies, Medicare/medicaid sets their rates Within some of these contracts, there may be reimbursement for certain services, materials, supplies, etc. That some insurers allow and others do not. There are some regulations as well that you cant charge a different price to someone based on their insurance or ability to pay. In order to maximize reimbursement, hospitals/doctors submit charges for everything whether or not your insurance may reimburse it(because someone else's insurance might and easier from an efficiency standpoint to do so), additionally because you can't charge different prices, the charged priced is some inflated number usually 1.5-2x the rate of medicare/cms, as some insurers may pay more than medicare some pay less. This is akin to basically throwing a bunch of mud of the wall and seeing what sticks.

This is also how we get these inflated charges but your insurances gets to say...look we saved you 200k with our discounts.

quote:

---

Costs for the medical procedures here vs the rest of the world is like 10 times as much.

---

The providers don't actually get paid what they bill. It's usually less than 20% in my experience when i or a family member have had a procedure.

quote:

---

Where did you get this total cost from? Is it the same if Medicare paid it? Is it the same if a different insurer paid it? Is it the same if you'd have cash in hand

---

Yes, it’s the same, thanks to government.

Not all of this is directed at you.

I’ve made it through 3 pages, haven’t seen someone medical explain insurance and costs yet, so here goes.

It is illegal for an entity to bill differently to private insurance vs government. Has to be the same, otherwise fraud.

Who controls cost: government. Medicare sets what they will pay for each procedure/visit/etc. All private insurers and Medicaid base their payment on a percentage of what Medicare sets.

Hospitals and doctors could charge you $1,000,000 for anything, but what they get paid by insurers is what the contract says. For instance, I take out your appendix, i charge $4000? Insurance says nah, we’ll pay $1000 based on my contract with them. The patient is on the hook for whatever percentage of that $1000, not the $4000. Billed Vs allowed.

So, providers base their charges on a percentage above Medicaid.

Why no one can tell you how much anything costs? There are 6+ major insurers plus many small ones. Within each of those are 6+ options to chose from, and within each of those are levels. The contract for each is different. So there may be 100 different variations, and the only one that knows the true cost is the insurance company. And the people that do the pre-certifications are not connected to billing, so are clueless to what it costs.

Why is it cheaper to get a cash price? It isn’t. Going back to billed Vs allowed, for the appendix, I’ll charge you $4000 (because I can’t charge anyone differently) but tell you I’ll drop the bill to $1000 because that’s the average that I get from insurance. If you can’t pay in full but want to, I’ll set up a payment plan.

quote:

---

Let’s see what happens to your premium after that hospital stay or surgery.

---

A few years ago, I had a stroke and spent a week in intensive care…my insurance premiums didn’t go up one cent.

quote:

---

I believe the percentage of folks who would save money over their lifetimes by paying cash as needed for care in lieu of health insurance outweigh folks who benefit.

---

Well, yeah.. but that’s the case for literally any type of insurance. The majority are going to pay in more than they receive in payouts. Otherwise, the insurance company wouldn’t be in business very long.

That’s the entire point of risk pooling - everyone pays a premium, and the people without claims effectively subsidize the people with claims. If everyone without medical issues drops their health insurance, it breaks the system. Some of those folks will inevitably have unexpected hospitalizations with huge bills that they can’t afford. Many of the folks left in the “unhealthy” pool will no longer be able to afford insurance, and will also rack up medical bills they can’t afford.

As long as it’s possible to receive $100k+ in medical bills due to unforeseen circumstances, we kind of need a functioning health insurance market. That’s part of the price we pay as a society in order to have widespread access to things like medevac, open heart surgery, organ transplants, etc. when needed. We either pool the risk or we cut off access to those services for everyone who can’t afford a $100k+ surprise.

All of that being said, it’s definitely a double-edged sword and I agree that the current business model leads to increased costs. I don’t think that’s due to insurance companies not caring what providers charge as you suggested - even if they do pass those costs on in the form of premiums, lower negotiated costs make the insurers more competitive and allow them to win more business. The real issue (IMHO) is that the risk pooling removes the “is this worth it?” question for the consumer/patient.

To me, the solution is higher deductibles/lower premiums and a shift back to coverage intended for more catastrophic events. Consumers/patients need to have skin in the game for sure. But there are a lot of other complicating factors (employer-provided benefits, preventative care, Medicaid/Medicare, etc.). It’s not an easy problem to solve.