Currently I have a HDHP with a deductible of 10k. My wife and I run our own software consultancy and make ~60k-80k a year. We have two children and we are all healthy. We are paying 300/mo for the individual health insurance plan. We have a sizable emergency fund (30k). We feel like we are being extorted for 300/mo without any services whatsoever. Since the deductible is so high we are paying for everything anyway. Aside from living for a doomsday scenario of a car accident or a long hospital stay is there any reason we shouldn't cancel and pay cash for the few visits we have during the year.
Should I cancel my health insurance?
By sburke56 Follow Tue, 10 Apr 2012, 11:07am 10,625 views 60 comments
In Garland TX 75040
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Emeryville, CA
That doomsday scenario seems like a good enough reason to be insured, to protect against bankruptcy.
What are your plans for doomsday, sans insurance?
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Garland, TX
Negotiate or not pay. Don't know how viable that plan is but aside from running from getting creditors on the case what recourse does a hospital have if I don't pay?
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Santa Cruz, CA
Wow, that's a high deductible. Enquiring minds want to know, is it from Anthem/Blue Cross?
The reason you have insurance is to protect your assets in case there is an accident or an illness in your family.You would owe a hospital money.
So, if you have no assets to protect except that $30K in cash, you could roll the dice and stop buying health insurance I suppose.
Also, if all of your financial net worth (assuming you have it) is tied up in things like 401k, IRA, annuity, etc. these are by law protected from civil judgement so you'd be able to owe a hospital money and keep them.
Next year if Obama care still exists, you will simply be charged via your tax return to "pay" for the care that the Govt. will provide you.
My illegal alien Mexican friends and acquaintances all have 1. tons of cash stashed 2. pay zero for all of their health care. I am bilingual because I lived in Mexico before coming here in 82.
If you file Sched. C because you have your software consultant business, you realize you are deducting that $300/month from your bottom line. So, this is means you are saving a little bit, e.g. $540 or so from your taxes.
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Garland, TX
Yeah it's BCBS. We are deducting it but $540 is less than the yearly cost of the premiums. It's frustrating since we get very little service from the plan and dealing with the insurance company for anything is a time sink so I hate to be living for a doomsday scenario and to be throwing money down the drain because the insurance companies have scared us so completely into believing that we need them.
All our assets are cash and tied up in retirement savings plans.
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Santa Cruz, CA
Then your only risk is the cash. You would pay it out in the event of some accident, etc. The $540 is of course less than the premiums but it's the equivalent of lowering your insurance by about $45 or so. Just so you feel a little better about it.
Insurance would be less expensive for many reasons. The reason the hospitals gouge your insurance company is the hospital is treating many people and not charging them. People who actually have insurance get the booby prize.
Some years ago it was not required by law that hospitals treat any person who showed up. Then, you better believe people bought insurance for the calamity of a bad accident, etc.
Personally I like the feeling of having that insurance card in my wallet.
If you feel like you will be lucky and healthy until you are in medicare, which is years away for you, then you could roll the dice.
If I had a family I would not stop the insurance myself, but since I am a wild and free single no one would suffer a consequence except I.
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Santa Cruz, CA
My personal experience with health care is as follows.
I have been healthy and never had been in a hospital except for stitches from various bashed head experiences. I've had strep throat, a sore back, and got the shits and flu in Mexico.
My only real experience was being hit by an out of control car driven by a nut in the turbocharged Toyota. I was nearly killed but ended up busted up with a broken shoulder and was taken into a hospital for a plastic surgeon to fix my forehead from hamburger to a human again.
Want to know which insurance works best? Car insurance! Carry some good insurance in case the other driver is uninsured.
I used my blue cross first, the claims were partially accepted, then I used my car insurance to pay the rest, and everything including my physical therapy and MRI for bad shoulder were paid for after all was said and done I was not out of pocket more than about $200 bucks.
Having the insurance card on me as they carried me into the ER made me feel much better. The odd thing is my car insurance didn't argue over ANY claim until I just ran out of benefit a year after the accident. I love AAA.
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I'm impressed how the Insurance industry has the Lemmings wrapped around their finger. People are the insurance industry abused bitch. It's like I'm dumb enough to take every inch the ins companies shove up my backside, there for everyone must be insured.
It's hard to work a good rabble up over it. The premiums could rise to 80% of peoples earnings, and they would still be opposed to just paying 5 to 10% more in taxes and having a government ran general healthcare system. That covered every thing from emergencies to catastrophic ailments. Then leave the elective and cosmetic medical procedures up to private health care.
But that would be too much like "Everybody gets a fair Shot" right Obama? I wonder how much does that asshole have invested in the insurance industry?
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Garland, TX
@CaptainShuddup So should I cancel or continue being a lemming and living for the doomsday scenario?
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clambo says
Is that the one that meets in the Church basement? "My name is Clambo, and I'm....." :)
I think dumping it is a horrible decision. It's 3 hundo for the family? That's cheap I'd think. That, and you're really subjecting the kids to risk, right?
Say, you need emergency treatment after an accident. They may stitch you up and fix the broken bones, but what about rehab? I don't think they are under obligation to give your children the care they might need after the ER, at least not in the way you'd want your loved ones to be taken care of.
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Its up to you man, for my money I'd rather put that $1400 a month ass pounding in the bank. In the last 17 years, my family of 4 has spent less than 2K on all things medial related, that's probably including eye exams, and glasses.
Imagine if I had put in $1400 a month in the bank drawing 0% interest. We would have $285,600 in the bank, not getting any interest at all, is another rant all together, and probably part of the grand scheme to make insurance companies seem like a good idea. But I digress, my point is, with that 285 thousand dollars, I could fly to south Africa buy a kidney, then fly to France and have it installed. And still have money left over. Chance are, even if I did buy insurance for the last 17 years, I could end up with a $285K in out pocket expenses, if I had a kidney failure.
Most peoples deductible and out of pocket costs, are the same as if I just went to a Doctor and paid for the visit and filled the script.
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Sunnyvale, CA
sburke56 says
You have a small emergency fund (30k) which is not enough to cover one moderate injury.
The hospital stays and operations to put my broken leg back together totaled $100K with the insurance company's negotiated discounts.
Your insurance, some one else's insurance, or un/under-insured motorist policy is likely to cover that.
Things like your children falling out of a tree and illnesses like cancer are the only reasons you need health insurance.
Although the hospitals are required to treat you, their goal is to prevent death and amputations.
With private insurance and sports medicine doctors the goal is to have you and your children running, playing sports, and otherwise being in the same shape you were before the injury.
You need insurance since you can't afford to pay for that yourself.
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elliemae's website
one accident or serious illness and you're screwed. keep the insurance if you can afford it.
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Pretty cheap peace of mind IMO. Also you should be benefiting by lower costs for services even if you dont meet the 10K deductible. That is, typically you pay the insurance negotiated rate for services you use even if the insurance company doesn't pay. You will typically pay a much higher price if you have no insurance for the same service.
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If you have HDHP then you are eligible to open an HSA (Health Savings account).
It reduces your income just like an IRA and the money can be rolled over to next year if you do not use it to pay your deductibles and such (not premiums). For the family you can deduct over $6K in 2012
http://www.treasury.gov/resource-center/faqs/Taxes/Pages/Health-Savings-Accounts.aspx
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Garland, TX
@drew_eckhardt
Can these prices really be a guide for what services really cost? Since the services are being billed to an insurance company they are inflated to begin with. Charges billed to insurance companies don't seem to be tied to anything logical at all.
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Garland, TX
@xlr8
Really $300/mo for piece of mind is cheap?
And I haven't found the insurance negotiated rates for services to be better at all. If anything not having insurance and paying cash would have worked out cheaper for docs visits. I don't know how that would work out with a hospital stay since that hasn't happened to me.
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Garland, TX
@xlr8
Yup have an HSA plan. It's all well and good. But we are still paying outrageous premiums for very little service. And unfortunately I don't get the warm fuzzy piece of mind that others have mentioned. I think that if the shit hits the fan the insurance company will find ways to not pay out.
Has anyone went to the hospital without insurance and negotiated what they would pay? Or does that situation just not happen? More likely an uninsured person just walks because thy have no money to pay anything?
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Cancel Insurance today because if you ever get a high bill they don't pay anyways!!! What are the maximum's in your policy? If there is ever anything really expensive it's either excluded in their fine print like on page 637 of the policy or they limit it to the cheapest most ineffective treatment. If you get seriously sick you still have lots of time to hide your assets (i.e. just transfer them into your spouses name, done!). They won't be able to collect from you. Then just make payments of the $300 a month which you are now "giving" your insurance company and they will not proceed with any further collection. Yes, when you get the bills you can also negotiate, I got them to lower most bills by around 50%! Just tell them you're a cash payer and got very little money. They will be happy to work with you and take whatever they can get instead of getting nothing at all. They setup a payment plan that's affordable for you and it usually got a nice ZERO percent interest on it!
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sburke56 says
Then buy stock in some health insurance companies if you really think that they are getting a lot of money for providing nothing. It's really the only way you can "win" on this issue.
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sburke56 says
Sounds like you have already made your mind up.
Maybe I am not the source you want to hear from having had a medical issue which probably has cost close to 500K over a period of a couple of years but mostly in one year. I had insurance ( Kaiser) and they have paid what they were required to pay without argument or hassle. For catastrophic coverage like you have the key is yearly out of pocket maximum. That is how much you pay before they pay everything, as even an 80/20 split can be very costly in a hospital situation. Mine was 3500 after which I paid nothing more for the year. We buy insurance hoping we never need it, not that it is a "good deal" on average, it isnt, it cant be.
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I'm curious of anyone's advice would change if the parameters were like mine. Similar profession, but due to current economic conditions, much lower income, plus much higher premium (also for a HDHP), such that the premium is about half of our usual monthly income. In the case of a medical event, the deductible alone ($6k) would be more than we could currently pay out of pocket.
The premium cost itself prevents preventative care, and we have piled up a few "unfunded liabilities" in the form of postponed care because of that.
Every month I consider cancelling it. The only reason I don't is if a very-high-cost medical event were to occur and it racked up a half million in costs and our income were to return to what used to pass for "normal", I might be thankful that I had hung on to that protection. There is another reason, really, and that is the feeling, possibly unfounded, that the insurance card will get us past the gatekeepers in the event of an event.
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Concord, NH
I have a HDHP/HSA from Anthem that runs me around $4000/yr in premiums plus $4100 HSA contribution. That's with a $5000 deductible for a 56 year old female with no chronic conditions or medications. It really pisses me off that I end up paying for those who choose a.) not to have insurance and b.)"not pay". I don't love the thought of contributing to the profits of the insurance industry, but I was brought up to practice personal responsibility, not just talk about it.
For those interested in negotiated rates, I went to the doctor in September for simple wellness physical, a few basic blood tests (cholesterol, etc.), pap, mammogram and flu shot. Insurance was billed $1349.50 (I was 100% healthy before and after the visit, mind you). Insurance allowed $891.03. I paid nothing, as my insurance plan covers 100% of preventative services. The local hospital, with whom my doctor and lab are associated, provides a 15% discount for the uninsured. So without insurance I would have paid $1147.
No matter how much you exercise and how carefully you watch your diet, bad things happen. You don't need insurance...until you do.
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I don't know what to recommend but before deciding whether to keep or drop the policy, I wonder if you have actually read the whole thing? Most people don't even have a copy of the actual policy, they just rely on the advertising for "peace of mind" and then discover too late that they aren't really covered and they would have been better off keeping the money in the bank. Beware of "balance billing," "allowable fee schedules," pre-certification requirements for emergency services, etc.
Insurance suffers from lobbying by special interests that require coverage for things no rational person would buy, e.g. toxic and disproved pills advertised on TV. So, your policy probably includes coverage for a lot of stuff you'd be better off without, and yet it likely skimps on the things you might actually need.
Also, insurance companies conspire with hospitals to overcharge everyone outside of their "network." If you drop the policy, you would be out of all networks, so you would be more vulnerable to the overcharges. Emergency hospital overcharges can exceed $100k. An insurer might pay 30% as "full payment," then the insured might get hit with co-pays and/or balance billing. This practice should be illegal, but it's very profitable, so it continues.
Emergency department costs total less than 3% of total medical spending nationwide, so a true emergency policy should cost very little. Unfortunately, insurers are not allowed to sell such a policy, and the policies they sell are so full of loopholes that they don't provide much peace of mind once you've read them.
I wish that I had a good simple answer. I was really hoping we would get genuine healthcare reform, but instead we got ObamaCare, which in my opinion makes matters worse.
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Garland, TX
@Bluezette
I mentioned this earlier in the thread and it bears repeating. Since these charges for services were billed to an insurance company they are not anywhere close to reality or what would be charges to an individual. It's so hard to get actual costs for services if you are paying cash. Has anyone successfully done this (paid cash and got prices up front) on a regular basis?
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Garland, TX
@Bluezette
My parents teaching was similar but only consisted of you need insurance and make sure it's a PPO. That's it. I think the game has changed a lot now a days and insurance companies are preying on this "do the right thing" attitude. While I don't love the idea of having others pay for me I do think the insurance companies have used that very argument to milk people for gobs of money in pure profit and the argument that they have to pay for the uninsured doesn't seem to hold water. Granted I haven't done my research so someone please chime in with some data for or against this.
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Bluezette says
If it makes you feel any better, so called "cost shifting" amounts to only 2% of spending. It was one of the red herrings used to fool people into an emotional decision to support ObamaCare. (Anger, fear, "those people are stealing from you, make them buy insurance!" "Bad things can happen, we'll protect you, pay no attention to the profiteers behind the curtain with their exclusions and balance billing!")
Bluezette says
Personal responsibility means getting vaccinated, driving carefully, looking both ways before crossing the street, etc. Supporters of insurance call it "shared responsibility," but personal responsibility would be people paying their own bills rather than shifting costs through subsidized insurance (Obamacare).
Bluezette says
If you were healthy before the visit, then the only clear benefit you got from it was the flu shot, which should have cost under $20. The mammogram was a trade-off: it showed that you probably don't have breast cancer now, but you got irradiated, which increased your risk of cancer in the future. So, $900 payment for a $20 vaccine, the provider got a lot of benefit, you got very little value for $.
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Concord, NH
curious2 says
Bad things happen to people who do all those things, too. Get a virus through not fault of your own and need a heart transplant? Have a brain aneurysm and need surgery and rehab? For anyone who can pay those bills on their own, I agree that they do not need insurance. For anyone else who can afford insurance, that's the responsible choice.
curious2 says
If I was looking for a dollar back for every dollar I spent that may be true. I don't expect to get a dollar back each year for every dollar I spend on health insurance or car insurance or homeowners insurance. But some day I may get back those dollars many times over. This year my "extra" dollars go to someone else who's having a very bad year. Next year it may be me. I hope it's not. Believe me, I don't like supporting the middle-man insurance industry, but until this country has a single payer system it's the only way to protect myself.
And as far as I knew, I was healthy before the visit. However, there is a history of cancer in my family. Should I wait until I'm symptomatic? I did research the recommended tests and cancelled an appointment for one I considered unnecessary based on my risk factors. (I suspect there was a new, expensive diagnostic machine that required lots of appointments, needed or not, to pay for it.)
curious2 says
Agreed! Until we have the choice of a single-payer system, these profit-making tricks need to be eliminated!
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Bluezette says
I'm genuinely glad to know you did research and made your own informed decision. That may be part of why education remains the best predictor of longevity, better than health insurance or money. Given the age and family history you posted, some diagnostic testing may lead to a longer life, albeit at higher cost. Most people age 20-50 probably should wait until they are symptomatic, because the risks of unnecessary radiation and misdiagnosis outweigh the benefits of early detection.
Elizabeth Edwards was "saved" by early detection, meaning she lived more than five years with her diagnosis. She died at 61 instead of probably around 60 if she had not gone in for treatment. I don't know when she started getting routine diagnostic radiation, but the troubling question is, if she had never done that, would she still have got cancer? Some women start getting those scans at 30 even without a family history. There is no way to trace an individual case of cancer to diagnostic radiation, but the increased risk lands on some unlucky people. Women used to have a lower premature mortality rate than men, yet in recent years women in many states have been paying more than men for health insurance. These tended to be states that mandated coverage of "preventive care," which ends up wasting so much money that it overwhelms the fact that women used to be cheaper than men to insure. Now ObamaCare will obscure that cost by mandating it for everyone at the same premium. Equal premiums made a compelling campaign slogan, but concealed the deeper problems causing premiums to increase.
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orbitron says
Very bipartisan! You've managed to quote a myth from each of the two major parties. So-called "cost shifting" (the Democrats' myth) is 2% of total spending. Medical malpractice awards (the Republicans' myth) amount to another 2%, and that includes people who have been killed or terribly injured by malpractice; hospitals injure 20% of patients, and most of the small stuff never even goes to the legal system. But, you've overlooked the mandates that require insurance to cover all the toxic disproved pills on TV, and the unnecessary doctor visits those ads generate.
A third of insurance premiums go to administrative costs (CEO salaries, etc.) and profit. Most of the actual medical spending occurs in the last year of life, much of it in the last month of life, meaning stuff that didn't make much difference. The late Senator Ted Kennedy was diagnosed with a brain tumor at age 76, and Mass General said there was nothing worth doing; he got a second opinion at Duke, where a series of brain surgeries took away his speech and ability to walk but enabled him to keep breathing to age 77. I loved Senator Kennedy, but if it were me, I wouldn't have wanted to spend my life savings that way. And with current insurance premiums, that's what people are doing: the savings rate has fallen to around zero, as people are required to put their $ into insurance instead.
The British spend half as much as we do, and live longer. The Canadians spend a third less than we do, and live longer. The Mexicans spend a tenth as much, and live almost as long, maybe longer if you adjust for education (still the best predictor of longevity). Each of those countries has a different system, but they all allow lawsuits for malpractice, and they all prohibit DTC drug ads on TV.
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Garland, TX
@curious2
Thanks for shooting down some myths that are constantly repeated as fact. Can you point me to some articles with the percentages that the insurance companies are paying out for certain things such as uninsured patients?
@rdm
Yeah I do already have my mind made up. I'm guessing you can guess which way I have chosen.
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sburke56 says
Insurance companies often don't even pay for their own customers, let alone the uninsured. But, the figure 2% is commonly cited, including by CBO and others:
http://www.aapsonline.org/newsoftheday/00385
On the whole, the uninsured often subsidize the insured, although that includes paying taxes that then pay for government employees' insurance:
http://liberty.pacificresearch.org/docLib/20070408_HPPv5n2_0207.pdf
http://www.cato.org/pub_display.php?pub_id=10576
More than 70% of 'medical bankruptcies' happen to people who had insurance, and RomneyCare led to increases in insurance premiums, hospitalizations, and 'medical bankruptcies'. (Medical bankruptcies are commonly defined as bankruptcies in which more than $5k of medical bills were discharged. The definition is intended to provide an approximation, there can be other factors also driving bankruptcy.)
Many articles report on administrative costs & profit vs "medical loss ratios," e.g.:
http://abcnews.go.com/GMA/YourMoney/health-insurance-premiums/story?id=8978954
Within the category of medical spending, around 50% goes to hospitals, another 30%-40% to doctors, and the remaining 10%-20% to pharmacies for prescription drugs.
Around here, we get direct mail ads from the local hospitals exhorting us to go there for every conceivable thing. Hospitals have practically monopolized childbirth, which used to be done at home; in Holland, most babies are born at home and they have lower infant mortality rates than America. Hospitals make extra $ by spreading infections:
http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/7617/
I don't think they deliberately try to spread infection, it's just that infection control is a lower priority than bringing in more patients. The financial incentives tend to affect the priorities, i.e. the executives that get promoted are the ones that figure out how the institution can make more $.
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zzyzzx says
Being a shareholder only entitles you to be robbed both ways by the executives. They rob the customers by denying valid claims, but they also rob the shareholders with inflated pay packages and private jets.
rdm says
That is how insurance should work but often doesn't. If you can find a policy where you can feel confident, based on the evidence, that they will actually pay for what is actually needed, then the tax deduction (tax subsidy) can make it a good value. I've read too many loopholes and heard too many horror stories.
The calculation may differ for children though. If they get hit by a car while bicycling, would they get everything they need to recover fully without a lifelong limp? (BTW relying on the driver's insurance might not work: a friend was hit by a car and the driver's insurance company cancelled her policy, claiming not to have received the check that month.) Likewise if one of them gets leukemia, which has a high cure rate in children, would they get everything they need? Also vaccine coverage tends to be more comprehensive for children than adults. I am skeptical of insurance for adults, but a tax-subsidized family policy that covers the children might net out to be a good value depending on what coverage they get out of it.
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Concord, NH
sburke56 says
Good luck and good health. Hope it works out for you.
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orbitron says
The sellers of pointless healthcare blame the fear of litigation, but that myth was debunked years ago:
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
The author compared two cities in Texas that have similar populations but a 2:1 ratio of Medicare spending, and found the difference was due mainly to entrepreneurial doctors. You can read more about the tort reform myth if you want:
http://www.coloradolaw.net/blog/litigation-crisis-myth/tort-reform-myth-2-tort-reform-will-improve-health-care-866439/
Medicare has less than 4% overhead, much cheaper than private insurance. (On the other hand, they deal with a more expensive population, i.e. the elderly, so the % may be a bit misleading.) They may have a higher fraud rate, maybe 10%, but part of that is because they pay too fast; they could easily reduce it by waiting for patients to object to "explanation of benefit" statements. ("60 Minutes" did a great report on this issue.) Insurance overhead is much higher, especially if you consider the billing games that require every medical practice to hire a full time billing coordinator if they want to take insurance.
As for being fat and lazy, yes that makes a difference compared to some other countries, but the 2:1 ratio within Texas occurs between two cities with equally fat and lazy populations.
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San Jose, CA
Drop your insurance. Just provide fake info the the hospital if shit hits the fan.
Just make sure to remove all your ID before you go to the hospital.
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Baltimore, MD
curious2 says
You can always vote against those pay packages. I always do.
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I agree. I wish all healthy people would stop paying. Let the insurance companies freak out and hopefully rethink their mafia scam. The entire system of being healthy in this country is utterly fucked.
Fucked fucked fucked.
Do they teach school children about the poisons used to grow food? Genetically fucked foods for all!!!!! Get cancer and die! Well actually, get cancer and suffer till they squeeze every penny out of you, then fucking die!
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My sister checked into a hospital for a routine non threatening procedure. She checked out and was sick for two years from a staff infection and still has recurring problems from just being in the hospital.
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KILLERJANE says
What kills me, hardly nobody had health insurance when we were growing up. And out of pocket pay as you go care was cheap enough and affordable by most standards, before Bill and Hillary Clinton "Fixed" it.
It was so cheap, free health care for the poor was a non issue, that's why Baptist and Shriner hospitals were possible.
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Further to the question of where does the money go, "By some estimates, unnecessary treatment constitutes one-third of medical spending in the United States."
http://www.nytimes.com/2012/04/04/health/doctor-panels-urge-fewer-routine-tests.html?_r=1
NY Times tends to be conservative on this particular subject; I would have guessed more than half is wasted.
Insurance overhead (counting both sides) costs around a third, plus waste fraud and abuse cost around another third, really that leaves only around a third that is actually useful. In my opinion, unfunded mandates and cost concealment through insurance and government tend to increase the waste, fraud, and abuse in the system, tripling total spending compared to actual value. (And part of the problem is, Medicare pricing is controlled by an AMA cartel, based on credentials and cost not value delivered.) If a Mexican gets strep throat, he walks into a pharmacy and buys a box of antibiotic for $10. If an American gets strep throat, he isn't allowed to do that; the American is mandated to go to a doctor for a prescription, then bring that to a pharmacy where somebody with 10 years of post-secondary education counts out the precise number of pills on the scrip (and sometimes puts the wrong pills into the bottle, which causes many illnesses and injuries each year), and the whole thing costs so much that he wants insurance to pay for it, which costs even more. The same strep that costs $10 in Mexico can easily cost $200 or more here. And that's in addition to all the unnecessary tests (Throat hurts? Have an MRI. Throat doesn't hurt yet? Have a CT scan.) When medicine is about health, it can be cheap, but when it's about money and power (insurers and politicians), it gets very expensive and wasteful. From the perspective of people who gain money and power from it, the system "succeeds" by amassing more money and power. From the perspective of people and their health, well that perspective doesn't matter, people are merely pods in the Matrix.