Sunday, March 24, 2019
Medical Insurance Insanity:
Transparency Before Reform
Before contemplating health care reform, our society must begin with transparency regarding health care costs. Calls for Medicare-For-All, single-payer systems, and other types of reform abound. Meanwhile, the situation, as it stands now, reeks of inefficiency, ineffectiveness, even corruption—part of that relating to the bizarre way services are charged.
Certainly, a major overhaul of our health care system is needed.
But we should begin by treating the health care system like any other capitalist endeavor:
List items or services with prices.
Allow consumers to easily find these costs.
Bill insurers, private parties, or whoever pays for medical bills the same rates.
The details of the Explanation of Benefits (EOB) from Blue Shield, related to my December 2018 cardiac surgery, provides a dramatic example of this one striking problem with the American health system.
This post extends an earlier one explaining possible solutions to our health care crisis, and you can find it here if interested:
You might consider taking a deep breath before diving into this profoundly flawed, arguably insane, EOB describing the six days I spent in USC/Keck Hospital for replacement of an infected, prosthetic aortic valve.
The EOB document runs 26 pages without even covering all “services” provided.
USC/Keck charged Blue Shield a total of $293,118.
Luckily, because I met the already-outrageous $6000 deductible for 2018, I had to personally pay nothing.
However, Blue Shield only paid the hospital $26,407.
How could USC/Keck have possibly billed nearly $300,000 and accepted less than ten percent of that amount?
This immense gap results from the common mark-up, mark-down practices typical of the contemporary medical-industrial complex. Because of the many ways hospitals get paid—by patients, the VA, private insurance, Medicare, or other methods—they create confusing codes for services and procedures. They over-charge for all of them, hoping to earn the most from the deepest pockets.
Hospitals, or any health service or equipment providers, don’t want to, say, post that a chest x-ray costs $75 when another radiological group, in Pasadena for example, or Downey, charges $50. They aim as high as they can, hoping to reap the greatest profit from consumers of their services.
Some people freak out at the thought of even partial socialism, but this hiding of actual costs has nothing to do with socialism.
It is, ironically, distinctly anti-capitalist.
It is a racket, a variation on corruption.
Do you find shampoo at Rite Aid listed at $10, and then expect to pay the cashier only $1 when you check out?
Of course not.
Consider now the “types of service” listed in the document. They are beyond opaque; they read like some kind of secret code.
Several entries describe “room/board.” We all know what that means. However, for the same six days, these are listed in varying amounts—$9,646 for one day and $18,536 for another—for example.
How could these be so different if they are, truly, only accounting for the hospital room and the (awful) food?
A number of entries read, “hospital miscellaneous.” These also have outrageous ranges. Some are as little as $180, and others as high as $57,932.
Is the open heart surgery included in that list somewhere? I can’t find it, did not receive a bill from the thoracic surgery group, and probably will not. Why bother to bill me if Blue Shield has paid the max?
What about the daily lab tests, x-rays, ultrasounds, and other measures or interventions?
Ah, an entry dated 12/17/18, the day of the surgery, helpfully lists “anesthesia.”
We all also know what that means.
Hooray, a little clarity, a bit of decoding.
The “amount billed” for the anesthetists was listed at $7375.
A number of less expensive “services” appear on subsequent pages. These include “laboratory,” “pharmacy,” and “radiology.”
I won’t belabor you with further details of the EOB because the point has been made, leading to an obvious question:
Why does our current system, before any reform has even been considered, lack simple transparency?
It is to hide costs so as to mislead consumers and maximize profits.
Creating transparency would be simple.
We consumers of health care services are not idiots.
We could understand phrases like:
The cardio-thoracic surgical group charged you $12,000 for the operation.
The medications you received while hospitalized ran $2,000.
The x-rays we needed to assess your recovery cost you $3,000.
You get the point.
Apparently a law went into effect in 2019 requiring hospitals to provide readable bills. But they remain beyond obtuse. No one understands them.
I haven’t seen any actual bills, for any of the services rendered that week, and I probably won’t. This EOB will probably serve as notice enough.
Before we Americans begin any reformation of our health care system, let’s start by requiring providers to be absolutely clear about what they are charging for what. Submitting insurance claims for medical services should be no different than in any other insurance realm.
If your car is damaged in an automobile accident, the benefits you receive are clearly delineated, item by item. They indicate what cost what.
EOBs for medical expenses should follow the same standard.
I hope this brief post further documents the insane, absurd, and harmful status of the way hospitals, at least, fail to behave like any other business. If we’re stuck with a capitalist approach to health care, let’s at least have clear prices for medications, medical equipment, or services.
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Alan Karbelnig, PhD, ABPP