Pajamas Media

26 Comments

This problem will never fix itself.

Neither will politicians.

http://www.agoyandhisblog.com/?p=146

Moreover, garlic is for vampires, not werewolves. What a bozo.

Huh?

1.) What’s the difference between a “deductible” and an “out of pocket cap”?

2.) How can an insurer be fined for “voiding sick subscribers’ policies - in many cases years after the subscribers had applied for coverage”? Was the insurance ever in force following the application and, if not, how can insurance that was never in force then be “voided”?

Psst, Todd, neither vampires or werewolves are real. Just to buy you a clue. Metaphors may be mixed and matched to suit your preference.

The out of pocket cap includes co-payments. For example, if you have a $2500 deductible, a $7500 out of pocket cap, and 80/20 co-pay, the insurance company pays 0% of the first $2500 in medical costs, 80% of the next $25000 in costs, and 100% above $27500.

edhesq,

For most insurance policies you have a deductible and co-insurance. The out of pocket cap is the max amount of money you have to pay in a year before your insurance will pay your claims with you having no responsibility. As an example, You have a policy with a $500.00 deductible and a out of pocket cap of $1000.00. You go to the doctor and get a bill for $3,000.00. The insurance after any contract discounts they have with the doctor, they then apply $500.00 to your deductible and $500.00 to your co-insurance, and the insurance pays the rest. You have now paid your max out of pocket expense. Say you go the hospital and the cost is $30,000.00. Your insurance will cover the stay in full with you having no responsibility. Raising the out of pocket cap is one way for he insurance not to have to pay much on claims. Hope this helps

Psst, Gerard, that was tongue-in-cheek. You knew that, right?

We all know that insurance companies are quite happy to provide you with insurance… as long as you don’t do the unthinkable and use it!

I was lucky. Lo these many many years ago when I had a malignant melanoma removed. My husband had insurance through his employer so there were no issues. But 20 years later - I am considered “high risk” even though I have not had a recurrence.

Gotta love insurance companies. They’ve managed to keep hold of a good thing for a long time and they are desperate to continue on in that vein.

Bill Clinton (oh this hurts to say!) had the right idea when he said that the way to proceed with universal health insurance was to let EVERYONE into the government employee insurance plan if they wanted to join. Details at ten…no, wait, what happened was that his observation was ignored.

But the reason Slick Willie was right is NOT that the government would pay for the insurance. He was right even if everyone had to pay the full cost themselves, because the great advantage of the government employee insurance system is that on the one hand, there are literally hundreds of different insurance vendors under the plan, each with its own spin on what it does, but ALL of the vendors have to meet certain basic government requirements to participate - and if they don’t they are kicked out. Happened to the Postmasters Plan last year.

Another reason he was right is because participation would have been what we used to call “voluntary.” Y’know, where you get to decide how to spend your own money? Freedom & all that? Doesn’t seem to be part of Schwarzenegger’s plan…

This is an excellent example of what happens when an unstoppable force (the cost of healthcare) meets an immovable object (the public’s desire to have access to unlimited heathcare for less than the monthly payment on their Honda).

One statistic I read suggested that 2004 HC spending in the US was around $6280 per capita. Assuming 1/3 of people are children, indigent, or retired (or all three), that gives us around $9000 of spending per employed person per year. As it happens, I paid around $4000 that year for HMO, and I went to the doctor once for an eye exame which cost $125. Even at that, that still left another $5000 that had to come from somewhere. These are not small numbers when multipled out over a population of 300 millions.

The problem is that we are presently at a very uncomfortable interstice. The only treatment for many victims of stroke in 1980 was embalming. Now we have evolved to the point where we have blood thinners costing into the tens of thousands per patient, but give grandma a fighting chance to collect Social Security for another ten years. We can hope that the cost of these miracles will, like the cost of flat-panel televisions, eventually come down to Earth.

My fear is that as we skid down this road, veering ever closer to the ditch of socialism, we will find ourselves with a system in which we go decades between important advances. Had Genentech never discovered Avastin, we would all be spared the exercise of having to argue over whether Blue Cross should pay for it, and the doctrine of fairness could be satisfied much more easily and cost-effectively. Such systems would of course make no accouting of the absence of our lovely hostess, whose company we owe in part to such magical elixirs as are dreamt up at astronomical costs by the alchemists of Genentech.

A little publicized problem in California is a law prohibiting small businesses and individuals from forming groups that could qualify for Group Coverage policies. Changing this would be a positive step for affordable coverage and putting a stop to cavalier policy cancellations.

The thing about mandatory insurance plans like this is that it forces the healthy young people to pay into the system (males specifically, the young variety of which do not typically have insurance, since they are immortal). This theoretically does two things–it reduces the cost of insuring all those women and not-so-young people, and it reduces the number of uninsured that the state has to pick up the tab for. It also theoretically works better than single-payer or single-provider systems, since it allows competition among private insurers.

These are all good arguments for it.

On the other hand, mandatory insurance severely grates on my libertarian instincts. I’ve made my choices on how I will spend my money to reflect my priorities in life. For the state to force me to adjust my life to suit their efficiency needs is just so wrong that it’s not even funny.

Here is a the real problem..(and I say this as a fomer member of the Reagan Revolution and an ardent capitalist..)…you can’t use health insurance as a profit making endeavour. Once the company is more beholden to the stock holders than the patients….the system stops working.

On the physicians side, everything has been turned on its head. Think we don’t have government medicine? Think again. The government publishes medicare rates. The insurance companies see those rate, and know that MD’s will work for that amount of money. They then “contract” with physicians knowing how much the government will pay them.

What does this mean? It means that if you come in and pay cash, your rate is twice what it would be with insurance! So now we have a system where the doctors make 50cents on the dollar on their billed rates with insurance, and the people who should be getting the best rate, cash pay, get the worst (at least in theory). Essentially, the government sets the rates of medical payment in this country.

Now, say an MD wants to cut a little old lady a break on her medicare payments…no way. If I say, “forget your 20% co-payment”, the government can charge me with fraud and put me away.

We are at a point where everyone involved loses, except the insurance company executives.

Cathy, you appear to believe that affordable medical coverage is something you are owed. Blue Shield has to get the money from somewhere, to pay for your drugs and treatments. If Blue Shield is so bad, why not forget them, and just pay for it all yourself? Take the premium you are paying them now and stick it in a savings account. Oops - that wouldn’t be enough money? Well then, you are getting a good deal from Blue Shield, aren’t you? That is: You hit your caps and at that point, they are paying more for you than you gave them. Isn’t that so? Why don’t you just come out and admit that you are hoping for a deal where “somebody” (which means other people) pays more for you than you have put in the system?

For an individual Blue Cross plan here in NJ, $429 a month gets you a $10,000 deductible, 50/50 copay, with a max out-of-pocket of $15,000. That’s for one person; the same plan for an adult+child would be $761 a month. Premiums have been going up about 20% a year.

I know this is going against the grain, but…

Let’s assume I am wealthy, and I have some wealthy friends. And, we see that Blue Cross is making “outrageous” profits of $2.5b. You might think that me and my friends would start our own Insurance Company, undercut BlueCross, get all their customers and still make a tidy profit.

So, what is the great conspiracy that prevents this? Or, is it possible that BlueCross isn’t making outrageous profits?

Making health insurance inexpensive, and insurance companies much more willing to pay is easy. Just get people to buy policies which only cover technology which has been in use for 20 years or more.

tjmmz : you appear not to have grasped the concept of insurance.

Of course Cathy is entitled to take out more than she put in, just as people who remain healthy are not.

Your “logic” would prevent winners of lotteries from collecting, after all, they take more than they put in too.

Insurance is a form of spreading risk. Lots lose small so no-one loses big.

The basic rules of economics are simple. When you have a health costs growing at 5-8% per year and the economy grows at 2-4% per year, something has to give.

It is inevitable that we have rationing under government care. It will probably come along the lines of restricting access to treatments through underinvestment in facilities. “Sure, the cancer treatment is covered by the state. However, there is a six month waiting period.”

Britain and Canada both do this.

Britain goes farther with explicit rationing. If you are over a certain age in Britain, and need expensive care you are sent to the hospice as you are considered to have lived a full life. So Granny probably won’t get Avastin. Or Herceptin. Or any of the other miracle drugs developed in the United States. Sorry, game over.

And, of course, once government covers health care, do you think that your employer will cover it? We will be at the mercy of government rationing.

You are right on the money to state that we should BREAK the link between employment and health coverage. Individualized policies, with CHOSEN caps, out of pocket caps, varied deductibles, and the MSA accounts are the only sane answer.
I advise my clients to fund the MSA FIRST. Before the IRA, before the SEPP, before the 401k.
The plans are new, and are still subject to the underwriting whims of companies which are -at times- just plain unjust.
However, they are the only way out of our present insurance mess.

Wellpoint bought Blue Cross Georgia a few years ago. Since that time my customers with them have seen their renewal rates (on individual policies) rise at about 66% faster than my customers with other insurance carriers. Needless to say, I busily moving everyone elsewhere, if they are healthy enough to get underwritten. My preferred carrier has contractual language in its policy that states that your renewal will never be higher than the new business rate for your age and plan design and your original health status at the time of application.
As far as covering those that either wait until they need benefits (they won’t buy insurance) I believe the only government involvement should be to set up a health analogue to the “assigned risk pool” in auto insurance which normally has a bare bones, very limited policy at an actuarially sound price.
BTW, the number of people that lie on insurance applications would even astound the tv character “House”. That is why insurance companies review their claims and applications for “forgotten” conditions near the end of their statutory challenge period.

Anecdotal evidence is not admissible, but this reminded me of my (so far) single visit to an emergency room as an adult.

My motor scooter had been hit from behind by a van, and an ambulance came to scoop me up and take me to the closest (participating) ER. Just in case, you know, subdural hematoma, cervical fracture, etc.

Weeks later, I got a friendly note from my HMO informing me that, as it had not actually been an _emergency_, they were disallowing the claim. It took me six months of belaboring them, but they finally relented.

Then they started asking if the van driver’s insurance company had given me any money, and if so, could they have it?

The rates charged to / paid by insurance companies to health care providers are nonsensical in the extreme. The “high cost of healthcare” rivals the “high cost of college tuition” in its divorce from reality caused by outside forces - in the case of healthcare, third-party payors (employers), and in the case of education, the government’s funding of student grants and loans to subsidize tuition.

As an example, I had a dual inguinal hernia operation a couple of years ago. I waived out of my insurer (Health Net)’s coverage because they were giving me unbelievable amounts of nonsensical “process-based” runaround based on their HMO referring physician arcana. So I spoke with the hernia doc and the hospital: the overall hospital cost including the anesthetist and nurses, etc. was about $6,000 out of pocket on a cash basis.

In the meantime, I had engaged an HSA with Blue Cross and was seeking their reimbursement after the surgery, and they required me to get a hospital invoice showing the charges and the insurance “codes” for the line items.

What I got for $6,000 cash was invoiced to the insurance company at over $28,000.

There is no reason that the insurance company’s costs should be more than 4x the actual cash cost of the procedures. It is time to attack the problem at its source; mandating everyone to participate in an insurance/healthcare cost scheme that’s so corrupt as my example shows is criminal, and politicians shouldn’t be excused from, much less lauded for their shirking of, their responsibilities to the public (and private) fisc.

vic, I suspect that the invoice you saw was not the charge to the insurance company. That charge would more likely have been at a negotiated rate far less than the 28K$ and perhaps even less than what you paid out of pocket.

In Connecticut in years past the hospital bills always included a significant increment to cover the costs associated with the care given by the hospital to those who could not pay. This resulted in obscenely high hospital bills.

I got to see many of these back when I practiced law and represented some hospitals in their collection efforts.

My own story is the reverse of yours.

I was injured at the airport. The guys in the silver suits offered me a ride in the ambulance. I declined the ambulance ride and instead allowed a maintenance worker to take me in the airport truck. It was a minor knee injury but I was unable to walk and was discharged with crutches in about three hours. My carrier refused to pay. I paid the bill, $210.00.

After explaining to the carrier that I didn’t go in the ambulance because I was trying to save them the money (and after I threatened to sue the bastards) they agreed to reimburse me. They paid me $93.00 which was their negotiated rate with the hospital for treatment such as I received.

I did find the statement from a Wellpoint medical director funny.

“If I keep garlic over my bed to keep away werewolves, and there aren’t werewolf attacks for five months… well, the logic is faulty there.”

That was a stupid thing to say. Here’s what he should have said.

“Many people with cancer and other terminal illnesses travel to Mexico in pursuit of miracle cures. Should we pay for one of these miracle cancer cures, even if a CT scan shows the cancer shrinking? We say no. We need to establish a threshold for what treatment is properly considered medical treatment. We have chosen FDA approval of the treatment as that threshold.”

Here’s an example that someone who’s not an actuary could understand. As part of your mobile phone package, you may elect to get your phone upgraded automatically once a year. That’s a cost that can be planned for. If the new phone typically retails for $200 and costs the company $140, perhaps they’ll charge $15 a month for this benefit. Now imagine the government tells the mobile service provider “You must provide a new phone twice a year.” Now, that service is no longer priced appropriately.

It’s pretty hard to price a product when at any point, the legislature or Department of Insurance can demand you cover a bunch of new $100,000 treatments without changing premiums.

As a nurse practitioner and an insurance customer, I have been on both sides of this game. Insurance payments are where most of my income comes from (Blue Cross is actually one of our best payers) but I am constantly amazed at what the insurance companies will do to avoid payment and sometimes wonder where the MD advisors get their educations.

We had an HMO patient who needed a hysterectomy due to fibroids (benign tumors) on her uterus. We gave her a medicine to shrink the fibroids prior to surgery (to reduce blood loss and possibly use a vaginal approach vs. an abdominal one) and her insurance then refused to cover the surgery because she was “cured”! The particular med we used was only approved for use at the time for six months, after which the fibroids would enlarge again. Some cure.

In another case, Medicare has recently changed coverage of some neuropsych testing and will pay for the testing but not the interpretation of the test. Sigh…. Medicare reps have assured me that they are aware of the problem and are working to fix it but what braniac caused this to happen in the first place?

I am now struggling with finding individual insurance for my family as the MD I work with now does not provide benefits and my husband is unemployed. Ironically, we were rejected by several of the payers whom I bill for services.

Cathy, I am glad you were insured prior to your diagnosis so you were able to continue coverage. Good luck with your treatment.