patrick.net

elliemae says

We’ve already covered that actual costs are usually 25-30% of billed charges. And insurance companies pay substantially less than the billed charges as well. The problem is that many doctors, clinics, hospitals, etc won’t take someone who’s private pay, even if they have the ability to pay out of pocket. And one wrong turn, one complication, and the costs are astronomical. Your argument doesn’t apply to the masses.

Perhaps the ultimate solution is to nationalize the health care system. If the Health Care system has a 400% markup on the product it produces, perhaps even an inefficient government system that only 200% wasteful will be an improvement over what we have now. No private doctors / hospitals, everyone is a government worker now that draws a salary.

Yea, that's one solution. It's worked elsewhere. It seems to me that the only plan that's acceptable to Big Insurance is one where they continue to make shitloads of money at the expense of the little guy.

beershrine says

On your next major medical visit. Hire your own doctor and rent the hospital room from the hospital. I talked to a guy with no insurance who did this for cancer treatment and spent under 10000.00

If he had insurance it would have been over 50,000.00.

Obama’s health bill will provide benefits to people that pay nothing. YOUR premiums will still go up.

I'd like to see the gun camera film (or at least the receipts) on that 1000 dollar cancer treatment.

10,000 dollar, not 1000 dollar.

fuzzywzhe says

I hate you retards. I would laugh at you if I could only escape this country.

Don't let the door hit you on the way out...

tatupu70 says

fuzzywzhe says

I hate you retards. I would laugh at you if I could only escape this country.

Don’t let the door hit you on the way out…

I missed that one - how incredibly offensive and naive. He can escape this country any time he wishes.

elliemae says

Yea, that’s one solution. It’s worked elsewhere. It seems to me that the only plan that’s acceptable to Big Insurance is one where they continue to make shitloads of money at the expense of the little guy.

Except, of course, that they really only make 3 to 4 cents on every dollar that they bring in....

Nomograph says

Furthermore, the industry spends only 17 cents of every dollar on health care. The rest goes to pay for wasteful overhead, bloated executive salaries, and expensive lobbyists. It’s hard to defend and industry that operates at less than 20 percent efficiency.

Let's not forget that a good chunk of that overhead goes to people whose job it is to figure out how to retro-deny benefits and issue denials. Denial bonuses are expensive. Funny thing is, if they approved more procedures and spent less trying not to pay for the care, they'd probably save money.

US private insurance companies are already bloated bureaucracies worse than government. You have no choice in health insurance, except to pay whatever they say, or die. They are only a few insurers, they all offer about the same coverage for a given price, and they don’t answer the phone. There is no market.

"Worse" than government Patrick? Yet if you take the profits of the top 10 largest US health insurance companies and total them up, the total is less than 1/2 of medicare fraud each year http://ur.lc/iei . The idea of an "efficient government" with lower administrative costs compared to private industry goes against everything we see and experience with government everyday. Your claim regarding govt. bureacracies being more efficient is false http://ur.lc/iej but makes great emotional headlines for those who can't be bothered with facts.

With insurance companies, for many/most people, if your insurance company doesn't pay legit claims, individuals and companies have the choice to switch to another carrier. With government controlling healthcare, there is NO such choice, which is why so many people with means in other countries come here for medical treatment instead of the "free" care in their own countries. And the only reason there is not more competition in our insurance market, is because government regulatory agencies interfere to limit who can and cannot sell insurance in each state. Government dictated tax system uses deduction to drive insurance decisions away from individuals, putting it in the hands of their employers. Too much government created the problems in our system, and now you are championing even more government to "fix" it. It's absurd. Everyone needs food to survive, so why not use your "logic" to have government take over grocery stores too?

Check out the percentage of MRI machines per person in any of the countries with govt controlled healthcare. No other country comes close. Neither do other countries come close to our cancer survival stats. Those are the metrics to use in evaluating the quality of health care. Life expectancy is a red herring since by itself, life expectency is not a valid indicator of healthcare quality.. especially in a nation like ours with high obesity rates, comparitively high murder rates and high rates of substance abuse, all of which effect life expectency rates yet none of them have to do with healthcare quality.

ZippyDDoodah says

Worse” than government Patrick? Yet if you take the profits of the top 10 largest US health insurance companies and total them up, the total is less than 1/2 of medicare fraud each year http://ur.lc/iei

Did you read Nomos post 2 before yours??

Did you read Nomos post 2 before yours??

Yes I did. His post offers nothing to dispute the massive amounts of medicare fraud that occurs each year, a claim which was cited in your blockquote of my post.

Federal govt salaries, on average, have exceeded salaries in the private sector. When you factor in their generous pension plans, the gap widens even further. The Federal govt has a long history of hiring "too many" people to do too little work because they have no market incentives to keep them efficient. Did you read this http://ur.lc/iej ?. Advocates of "efficient" govt bureaucracies have to use dishonest methods to support their claims.

Medicare fraud is a problem. However, when we discuss Medicare, we neglect to mention that Medicare is a payment source that's administered by private companies. So the estimated Medicare fraud boosts the bottom line of the companies processing the payments.

What I mean is this: Medicare is administered by intermediaries. These companies, such as BC/BS, charge the Medicare system for every piece of paper that crosses their desk. They then tell the govt how many Medicare dollars to pay the provider. Since the intermediary profits from the claims, it seems to me that it's incestuous to expect them to police their lifeblood.

We need to have a streamlined system to address Medicare fraud - but the Medicare system helps a hell of a lot more people than the fraudulent amounts affect.

Whistleblowers in the industry are demonized and lose their careers. They might receive $ as a reward later on, but until the fraudulent amounts are determined and fines actually paid, the person's life is in disarray and they're figuring out how to live. The incentive is to not report - unless they've socked away a few years worth of living expenses. Even then, there's no guarantee that they'll get anything.

The system is asinine in some regards. For instance, the motorized scooter scamdustry. Sure, some people need a power chair or scooter to preserve their independence. However, a scooter costs about $6,000. The patient pays about $800 of that amount, unless they've got a supplemental policy or Medicaid. The companies will take payments for this amount. There's usually a non-transferable warranty of about a year.

The resale value is different - about $500 or so, and no insurance policy will pay for a used piece of equipment. So someone who needs a powerchair or scooter and can't pay the whole amount up front is out of luck. The incentive is to allow Medicare to pay for the chair. And to top it off, the Physical Therapy evaluation that's required is an area that's ripe for fraud. If the PT isn't honest, he/she can get $$$ for the evaluation and kickbacks from the equipment provider. Win/win for the equipment company, the therapy company, and the patient. But we all lose in the end.

So if a patient dies or is no longer able to use the scooter, they're stuck with a useless piece of equipment that they're lucky if they can sell. The obvious answer is for insurance companies to pay for rehabilitated power chairs/scooters for patients - but instead we pay for new equipment while the old sits idle. Next time you watch an ad for one of these scooter companies, think of the thousands that Medicare is paying out of pocket for this equipment.

Same thing with a walker. They're just pieces of metal, with interchangeable parts. Medicare pays for new walkers, while the old ones are donated to thrift stores because no one will pay for them when Medicare provides a new one. Equipment companies make a shitload of money off this stuff and their powerful lobbyists won't allow for refurbished equipment changing their bottom lines. Another great way to fraud Medicare is the company(s) that send out equipment to unsuspecting consumers and charging hundreds or thousands for the stuff that the senior didn't need. They record the calls, and if they can get the senior to say "yes" to anything they profit tremendously.

Again - many people need the equipment. But refurbished can be as good as new.

The system is asinine in some regards. For instance, the motorized scooter scamdustry. Sure, some people need a power chair or scooter to preserve their independence. However, a scooter costs about $6,000. The patient pays about $800 of that amount, unless they’ve got a supplemental policy or Medicaid. The companies will take payments for this amount. There’s usually a non-transferable warranty of about a year.

The resale value is different - about $500 or so, and no insurance policy will pay for a used piece of equipment. So someone who needs a powerchair or scooter and can’t pay the whole amount up front is out of luck.

Another example of unintended consequences of government rules creating perverse incentives..

Interesting observation regarding medicare intermediaries

Only 17% of each dollar taken in by insurance companies is spent on health care. The other 83% is wasted

Can you provide a cite for that? Especially the part on the 83% being "wasted"..

Nomo, if this study http://ur.lc/iel (pdf) is even close to being correct, then you have a serious credibility problem. From the study:

By far the largest component of a health insurance premium is the medical cost. During the period covered by the examination, at Blue Cross, approximately 84% of total
premium goes toward medical expenses, while at United approximately 78% of total
premium was for medical costs.

Zlxr says

Yes Medicare does pay without checking a whole lot and that’s why - down the road - they take money back (a whole lot).

Let's not forget that Medicare doesn't pay 100% of the bills. Medicare pays 80/20. That's 80% of approved charges. Example: if the MD bills $120 for a visit, Medicare approves $100, Medicare pays $80 and the patient pays $20 (or $40 if the doc doesn't take assignment). For rehab post hospitalization, the first 20 days are 100% after which the patient pays $137.50 per day for his share of cost. People often buy supplemental policies that cover these charges - they pay $200/mo or so to a private insurance company to cover some or all of these out of pocket costs.

They spend more time being Weazels than they do acting like they have an interest in patient care. If they spend so much time trying not to pay for services - you have to wonder what they do spend it on.

Insurance companies are far from perfect and they have disputed and delayed payment for what I thought should be slam dunk payments. But they also pay out a ton of money for needed medical care. The study I cited upthread http://ur.lc/iel sheds cold hard facts on this question. Blue Cross pays out 84% of premium revenue on medical care.. that is, payments to doctors, hospitals and clinics. 14% overhead does not seem unreasonable. Health care insurance companies operate on a 2% - 4% profit margin.

Medicare, on the other hand, recklessly squanders at least $60 billion dollars of needed resources every year on fraud http://ur.lc/iei because they have no market incentives to control it. That's not counting all the other wastesd millions and billions they cause with hairbrained rules like the one ellie mentioned on their absurd mototized wheelchair policies. Private insurance companies would go bankrupt if they had to deal with even a tiny fraction of that kind of fraud and waste that Medicare carelessly tolerates each year.

ZippyDDoodah says

Private insurance companies would go bankrupt if they had to deal with even a tiny fraction of that kind of fraud and waste that Medicare carelessly tolerates each year.

Private insurance runs by the same rules as Medicare when it comes to the wheelchair thang. And, once again, private companies are the ones who are administering the Medicare program. When you slam Medicare, you're saying that the private contractors (insurance companies) with whom CMS has contracted need to be replaced.

Yep, that's about right. They do. Fraud would be decreased.

However, when citing insurance issues, you might wish to use a study that is applicable to more than the state of Rhode Island. Also, it's difficult to compare HMO's, PPO's, and traditional insurances. Page 25 states, "The purpose of this report is to describe the overall state of the small employer health insurance market in RI and to make recommendations for policy changes."

Hardly the basis for an argument in support of private insurance vs. Medicare.

The only time the word Medicare appears in that document, so far as my search provided, was the statement, "An example of back-door underwriting would be to require applicatnts to a Medicare Advantage prouct to enroll in person in a room which can be reached only by climbing two flights of stairs." (page 141). The word "fraud" appears on page 116 and refers to employers who aren't truthful on their annual recertifications.

Private insurance runs by the same rules as Medicare when it comes to the wheelchair thang

Insurance companies are forced to be wasteful too because of hairbrained govt rules forcing them to.

And, once again, private companies are the ones who are administering the Medicare program. When you slam Medicare, you’re saying that the private contractors (insurance companies) with whom CMS has contracted need to be replaced.

In many cases, absolutely yes. Medicare sends billions of $$$ to reckless and criminal private companies and does little to police it. Medicare has been absolutely reckless to the extreme in not monitoring fraud. If it was a private company administering that spending, they couldn't afford to survive with even a tiny fraction of that fraud. But Medicare, which has "unlimited" taxpayer resources no matter how wasteful they are, continues to fund more fraud and more waste.

Hardly the basis for an argument in support of private insurance vs. Medicare.

The only time the word Medicare appears in that document, so far as my search provided, was the statement

Contrary to what you suggest, I never claimed that document was the "basis" for an argument in support of private insurance vs. Medicare. I cited it to contradict Nomo's false claim that insurance companies payout only 17% of premiums toward medical care with the other 83% being waste when the truth is that they payout approx 80% toward medical treatments. He simply made that stat up because ends justify the means when debating "rightwingnuts"

It was in that context which I provided the citation. To dispute a specific false claim.

Well, you can't have it both ways. You're saying that private insurance works, but then you agree that private insurance companies are funding fraud with Medicare dollars.

When Medicare fraud is proven, the dollars must be paid back. The companies that are adminstering the monies are paid by the claims that they process - so their incentive is to keep processing the claims and not question them. Any fraud that's discovered doesn't affect the intermediary, as it was already paid to process the claims.

I saw "House of Cards" yesterday (again) about the credit/housing crisis; one of the mortgage lenders (now out of business) said that even though he wasn't thrilled about subprime loans, if he hadn't funded them his business would have tanked and the borrowers gone elsewhere. So, even though he owns some of the problems created by loans he funded, if he hadn't funded them it wouldn't have stopped.

Yes, Medicare fraud needs to stop. Rules need to be changed & tightened. But private companies are the ones who are committing the fraud and to say that it would all be better if insurance was only private is short-sighted and just plain dumb.

Well, you can’t have it both ways. You’re saying that private insurance works, but then you agree that private insurance companies are funding fraud with Medicare dollars.

To my knowledge, Medicare does payout to private insurance companies, they pay providers directly. Please correct me if I am mistaken on that point.

If they do deal with insurers, then it is the fault of Medicare that their rules and enforcement are so wasteful and fraud-ridden. Forcing insurance companies to comply with rules such as the power wheelchair fiasco you cited is a predictable and common result when governement is in charge of the spending.

ZippyDDoodah says

To my knowledge, Medicare does payout to private insurance companies, they pay providers directly. Please correct me if I am mistaken on that point.

Intermediaries (private insurance companies such as BC) process the claims and tells Medicare what to pay. If they were to question the claims and request additional information, there would be less fraud. But the incentive is for them to approve the charges, bill Medicare for their service and everyone gets paid.

Medicare doesn't force insurance providers to comply with the power wheelchair thing. Insurance providers will only pay for new equipment, not used equipment. Medicare has nothing to do with their choice. The Medicare policy of only paying for new wheelchairs has nothing to do with private provider's policies. I'm sure that it has everything to do with the lobbyists employed by the equipment providers.

I'm not saying that there's no fraud in Medicare - but much of the fraud could be stopped if there were more incentives for the private contractors to deny or request more information. Medicare helps many people, and you don't want to cut a program completely just because there are problems - you want to fix the problems.

Just like you don't divorce the spouse if he/she gains a few pounds or gets a stupid (to you) hobby - do you?

But the incentive is for them to approve the charges, bill Medicare for their service and everyone gets paid.

Thanks for the clarification, although I've read that BC has mostly dropped their relationship with Medicare as role of fiscal intermediary. The govt system creates these preverse incentives to approve all charges and not police fraud.

I find it hard to believe that private insurers would refuse to buy good used equipment unless forced to do so by govt or lawsuits.

My overall point is the by it's nature, government spending will be far, far more wasteful and fraud-ridden as compared to private industry. They have no incentives to control fraud or prevent waste, it's the nature of the govt. beast. Hence, the massive medicare fraud each year continues. There is no incentive "fix" when there's no profits involved.

Nomograph says

Paralithodes says

they really only make 3 to 4 cents on every dollar that they bring in

Completely incorrect. The 3-4 cents is what’s left over after the lobbyists and executives have taken their bloated salaries and huge bonuses. They are making money hand over fist, and leave almost nothing at the trough.
Furthermore, the industry spends only 17 cents of every dollar on health care. The rest goes to pay for wasteful overhead, bloated executive salaries, and expensive lobbyists. It’s hard to defend and industry that operates at less than 20 percent efficiency.

Completely incorrect? What % of the overhead specifically goes towards executive (and lobbyist) salary and bonus? How much more per dollar would the average profit be if these were in line with a top middle-manager?

Furthermore, only 17 cents of every dollar is spent on health care? Perhaps you should examine a couple of company financial statements....

Paralithodes says

Furthermore, only 17 cents of every dollar is spent on health care? Perhaps you should examine a couple of company financial statements….

I think it would be very difficult to get a good number for what % goes towards actual health care from a company financial statement. Any company would obviously try to put as much cost as possible under the "providing health care" umbrella as possible and keeping overhead as low as possible. And they would have a lot of leeway to categorize the costs as they see fit.

b u m p

There are a couple of things that are commonly argued not to be run for profit, such as law enforcement, military, public parks, hospitals and general medical care and so on.. That doesn't mean they should be run on deficits either though. Universal health care works if it is funded and not running up deficits. Most countries that have universal healthcare require people to always pay in (fees, taxes etc.) as this is the only way insurance can work and be funded, Obviously you need a big enough working population at any point in time that can fund the people who cannot afford to pay in at the time. Having basic healthcare run with very competitive (e.g. much cheaper) rates on at least a break-even basis by the government is an option, while additional services, non-essential services such as plastic surgery or reproductive help and general special requests can be covered by private insurances.

mell says

Most countries that have universal healthcare require people to always pay in (fees, taxes etc.) as this is the only way insurance can work and be funded,

The American government already spends more on healthcare as a share of GDP than the British government. The difference is the British NHS covers the entire population, with no special fees or "mandates," and life expectancy in Britain is longer than here. Insurance existed for centuries without being mandatory; the "individual mandate" was a quid pro quo to buy lobbyists' support with increased spending. Bottom line, we are already paying for universal healthcare, we just aren't receiving it, because our system is designed to increase revenue, not to improve health. Officially more than a third of all medical spending in America is waste, fraud, and abuse; the actual number is probably more than half.

Patrick is right about the problem, but unfortunately both major parties work for the same revenue recipients, so their slogans devolve into a beer commercial ("tastes great" vs "less filling"): more $ vs less accountability. The Democrats make the system even more overpriced than it already is, the Republicans want to make it even less accountable than it already is. And of course the lobbyists and PR firms control Faux news, but they also control the rest of the commercial news; literally a majority of the ads on TV news come from PhRMA, and who pays the piper calls the tune. Newspaper "journalists" accept speaking fees from AHIP and even the tobacco companies. (What do these companies have in common? They both kill their customers for profit.) In 2008, then-Senators Obama and Biden campaigned on a very good plan with no mandates; pity we never heard about it again.

curious2 says

with no special fees or "mandates

lol your insane the uk has a 17.5% VAT

you will find yourself being taxed 3 to 6 times as a regular uk citizen on goods and services.

The UK government spends 50 pence on every $1 of revenue!

95%+ TAX on gas!

curious2 says

Bottom line, we are already paying for universal healthcare, we just aren't receiving it

Yes, that's true!

curious2 says

Officially more than a third of all medical spending in America is waste, fraud, and abuse; the actual number is probably more than half.

Patrick is right about the problem, but unfortunately both major parties work for the same revenue recipients, so their slogans devolve into a beer commercial ("tastes great" vs "less filling"): more $ vs less accountability.

Sure, this wasn't a plug for Obamacare, it was just to show that it can work and does work in certain countries (I would actually take a few countries out as the services you get are inferior to the ones you get in the US, but enough countries are definitely competitive enough to prove the point). But can it work in the US due to the problems you mentioned? Who knows, not betting the farm on it.

Politicofact says

your insane...The UK government spends 50 pence on every $1 of revenue!

American government spending is around 40% of GDP, and if you add what Americans pay for corporate medical insurance the sum exceeds Britain's 50%. Honestly I find it difficult to believe your avatar's claim of being a lawyer, because a lawyer would know the difference between "your" and "you're", and the difference between pence and Dollars (50p/$1 would be around 80% of GDP). Your name-calling reminds me of Marcus, who pretends to be a math teacher. Both of you remind me of the old cartoon from The New Yorker: a mutt explains to a Dalmation, "On the Internet, nobody knows you're a dog."

We used to have BC/BS in this country, until a free market fanatic in the 70s got a law passed forcing companies with more than 50 employees to offer HMOs to employees. The young took the HMO (Babyboomers at the time); the older and those with children or problems stayed with BC/BS. Those were the seeds of destruction.

I remember as a kid going to the doctor. At first, he had just one F/T office gal. By the time I was 12, he had three F/T and two P/T office workers to keep up with all the "Wonderful Choices" of the various for-profit health care plans.

@bgamall4

I really wish somebody would look into the Hospital/Lab-Insurance Company relationship. I don't have the time (or aptitude or understanding) to delve into it, but I wouldn't be surprised to see interconnecting relationships between for profit Labs and Hospitals and Insurance Companies to keep prices high.

thunderlips11 says

I wouldn't be surprised to see interconnecting relationships between for profit Labs and Hospitals and Insurance Companies to keep prices high.

It's happening in plain sight: insurance companies are buying hospitals, corporate practice groups, everything:

http://www.beckershospitalreview.com/hospital-management-administration/the-quiet-takeover-insurers-buying-physicians-and-hospitals.html

It's accelerating now because of the impending MLR requirements, i.e. at least 80%/85% of premiums need to be shifted from the insurance side of the business to the medical side. Easy to do when the same corporation owns both sides. Result: higher prices.

Does China, India, Mexico, and Brazil have socialized medicine? Aren't those the countries that we primarily lose jobs to and shouldn't we be comparing ourselves to them instead of other industrialized countries that are really more like economic has beens?

curious2 says

It's accelerating now because of the impending MLR requirements, i.e. at least 80%/85% of premiums need to be shifted from the insurance side of the business to the medical side. Easy to do when the same corporation owns both sides. Result: higher prices.

Interesting. I always felt there was more than just "we negotiated with these guys" reasons for having enrollees use particular providers.

Know what else is F**ked up? My CPAP machine was $400 new from China. It cost "my insurance" $900 to rent it, probably from themselves (ie a DME store they themselves own). I ended up having it for 6 months. You can't buy CPAP machines without a perscription. Huh? Somebody is going to die from forcing air in their lungs? Seriously?

Everyone should know that if all health care is left to the private sector, prices will fall & quality will improve.lol

This is America, dammit. I have the right to make insurance monopolies rich at my expense!