Why Your Health Insurer Doesn't Care About Your Big Bills

[Islam Imamate]

Interesting article on the nature of the relationship between health insurance companies and healthcare providers that sheds light on why the US pays more per person for healthcare than any other country but seemingly gets less in return. The article follows Frank as an example, a New York resident who got a partial hip replacement who tried to contest his bill.

tl;dr: Both Healthcare providers and insurers profit from rising costs and negotiate with one another to achieve this end with little to no transparency

Widely perceived as fierce guardians of health care spending, insurers, in many cases, aren't. In fact, they often agree to pay high prices, then pass them along to patients...

You would think that health insurers would make money, in part, by reducing how much they spend.

Turns out, insurers don't have to decrease spending to make money. They just have to accurately predict how much the people they insure will cost. That way they can set premiums to cover those costs — adding about 20 percent for their administration and profit. If they're right, they make money. If they're wrong, they lose money. But, they aren't too worried if they guess wrong. They can usually cover losses by raising rates the following year.

After reading this part I thought of @Jack V Savage who often argues that the ACA reduced healthcare costs. Not saying he's necessarily wrong but this is what the article had to say about that.

The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That's good in theory, but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here's how: Let's say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more.

It's as if a mom told her son he could have 3 percent of a bowl of ice cream. A clever child would say, "Make it a bigger bowl."

There's a lot more to to dig into in the article but these were the key parts of the article I wanted to address. Our healthcare systems is obviously broken, we pay more for less. Even if you agree Obamacare was an improvement(I think it was) it doesn't seem like it was nearly enough, at best a band-aid solution. Its like the system is designed to benefit everyone at the expense of the consumer, the exact opposite of what you want from a healthcare system.

 

[Benny Viper]

Why does everyone talk about health insurance costs and not the actual cost of said treatment?

 

[Islam Imamate]

Why does everyone talk about health insurance costs and not the actual cost of said treatment?

If you read the article, or even the excerpt in the OP, you might know why. Healthcare providers charge exorbitant prices because health insurance companies agree to pay them and they do this because both profit from this arrangement. So the cost of the treatment is related to the insurance industry and the system in general as it incentivizes rising costs.

"These insurers and providers have a symbiotic relationship," said Wendell Potter, who left a career as a public relations executive in the insurance industry to become an author and patient advocate. "There's not a great deal of incentive on the part of any players to bring the costs down."

 

[7437]

If you read the article, or even the excerpt in the OP, you might know why. Healthcare providers charge exorbitant prices because health insurance companies agree to pay them and they do this because both profit from this arrangement. So the cost of the treatment is related to the insurance industry and the system in general as it incentivizes rising costs.

reading is pretty hard though

 

[Jack V Savage]

The ACA factually has reduced cost growth. And the profit cap is only a small part of the overall cost-curve-bending approach. I'd agree that in isolation it wouldn't be enough to reduce cost growth for the reason stated.

 

[Islam Imamate]

The ACA factually has reduced cost growth. And the profit cap is only a small part of the overall cost-curve-bending approach. I'd agree that in isolation it wouldn't be enough to reduce cost growth for the reason stated.

Would agree that even he ACA in its entirety wasn't enough despite helping overall? If so, what else could be done to lower costs?

 

[genecop]

System based in greed and deception, shocking..

 

[MayhemMonkey]

Would agree that even he ACA in its entirety wasn't enough despite helping overall? If so, what else could be done to lower costs?

single payer, take the power out of the insurance companies hands

 

[oldshadow]

I see the point and it has merit.

However let's say we out the the healthcare industry and the insurance companies in a adversary position.

Where the insurance companies would not agree to pay on an agreed amount for procudures but would just set a amount they would pay on their on.

How do you think this adversary position would help the person insured?

I think it would hurt them even more.

You would end up with the person paying even more.

I have had bills and most in network have amounts that the insurance company disallows and because of the agreement I still don't have to pay it. I still only have to pay the agreed upon copays .

Yes we have problems to fix but you have to be careful and understand what happens when you try and fix something. You could fuck it up worse.

 

[oldshadow]

single payer, take the power out of the insurance companies hands

Yea no one has convinced me I'll get as good of care as I get now.

So no thank you.

 

[MayhemMonkey]

Yea no one has convinced me I'll get as good of care as I get now.

So no thank you.

you will still have the option of private healthcare if you wish to pay for it, but it would cost significantly less than it does now because they wouldnt hold all the power.

We have private healthcare over here, but as previously stated it is optional

 

[MPD-Psycho]

Now it looks like if you have a good employer you can get a better deal with reasonable coverage, if not you’re screwed unless you’re rich.

 

[Islam Imamate]

I see the point and it has merit.

However let's say we out the the healthcare industry and the insurance companies in a adversary position.

Where the insurance companies would not agree to pay on an agreed amount for procudures but would just set a amount they would pay on their on.

How do you think this adversary position would help the person insured?

I think it would hurt them even more.

You would end up with the person paying even more.

I have had bills and most in network have amounts that the insurance company disallows and because of the agreement I still don't have to pay it. I still only have to pay the agreed upon copays .

Yes we have problems to fix but you have to be careful and understand what happens when you try and fix something. You could fuck it up worse.

It would help the insured because incentivizing the insurer to keep costs down would presumably help avoid stuff like this.

With a practiced eye, Frank scanned the billing codes hospitals use to get paid and immediately saw red flags: There were charges for physical therapy sessions that never took place and drugs he never received.

Yea no one has convinced me I'll get as good of care as I get now.

So no thank you.

Isn't the fact that the US pays the most for healthcare with less coverage enough to make you at least second guess the system? Maybe even consider single payer which is more efficient than our system everywhere its implemented?

 

[oldshadow]

you will still have the option of private healthcare if you wish to pay for it, but it would cost significantly less than it does now because they wouldnt hold all the power.

We have private healthcare over here, but as previously stated it is optional

I would have to see cost and what I would get.

Now if I want to see a specialist I just call make an appointment, go and pay my 20 dollars. I can get in most of the time in week.

If I'm sick. I can go to the doc in a box walk in 8 am to 10 pm 7 days a week 365 a year and just pay my 20 dollars.

I have a 350 deductible per person (wife and I only) per year.

Like I said we need improvements but I'm not ready to throw the baby out with the bathwater.

 

[MayhemMonkey]

I would have to see cost and what I would get.

Now if I want to see a specialist I just call make an appointment, go and pay my 20 dollars. I can get in most of the time in week.

If I'm sick. I can go to the doc in a box walk in 8 am to 10 pm 7 days a week 365 a year and just pay my 20 dollars.

I have a 350 deductible per person (wife and I only) per year.

Like I said we need improvements but I'm not ready to throw the baby out with the bathwater.

I have no idea what any of that means lol

what is your total cost per year for healthcare? (apologies if you explain it here)

 

[Neph]

I would have to see cost and what I would get.

Now if I want to see a specialist I just call make an appointment, go and pay my 20 dollars. I can get in most of the time in week.

If I'm sick. I can go to the doc in a box walk in 8 am to 10 pm 7 days a week 365 a year and just pay my 20 dollars.

I have a 350 deductible per person (wife and I only) per year.

Like I said we need improvements but I'm not ready to throw the baby out with the bathwater.

In case you are interested what it's like in a two tier system I have public health care only and have no real need for private. If I go to my local doctor it is entirely free.

 

[oldshadow]

It would help the insured because incentivizing the insurer to keep costs down would presumably help avoid stuff like this.


Isn't the fact that the US pays the most for healthcare with less coverage enough to make you at least second guess the system? Maybe even consider single payer which is more efficient than our system everywhere its implemented?

I have good health insurance and worked to get it.

We pay I pay and my former employer pays part.

Yes we need to look at ways to help those that can not afford health insurance .

I have gotten good care.

Are you adding all the tax they have to pay and then the loss of service we get with a huge single payer plan.

 

[oldshadow]

I have no idea what any of that means lol

what is your total cost per year for healthcare? (apologies if you explain it here)

My cost for year for insurance for myself and the wife is about 5,000 dollars. The I have a copay per doctor's visit of 20 dollars.

We have a 350 dollar we pay for some things and then they pay 80 to 100 present after that.

To see a general doctor I can just walk in anytime from 8am to 10pm 7 days a week 365 days a year, I just pay 20 dollars.

I don't need any thing to see a specialist I just call and make n appointment.

 

[Islam Imamate]

I have good health insurance and worked to get it.

We pay I pay and my former employer pays part.

Yes we need to look at ways to help those that can not afford health insurance .

I have gotten good care.

Even employer plans are seeing rising costs. From the piece in the OP:

Employers are equally captive to the rising prices. They fund benefits for more than 150 million Americans and see health care expenses eating up more and more of their budgets.

Richard Master, the founder and CEO of MCS Industries in Easton, Pa., offered to share his numbers.

But the cost of health care is a growing burden for MCS and its 170 employees. A decade ago, Master said, an MCS family policy cost $1,000 a month with no deductible. Now it's more than $2,000 a month with a $6,000 deductible. MCS covers 75 percent of the premium and the entire deductible. Those rising costs eat into every employee's take-home pay.

Economist Priyanka Anand of George Mason University said employers nationwide are passing rising health care costs on to their workers by asking them to absorb a larger share of higher premiums. Anand studied Bureau of Labor Statistics data and found that every time health care costs rose by a dollar, an employee's overall compensation got cut by 52 cents.

Are you adding all the tax they have to pay and then the loss of service we get with a huge single payer plan.

Yes it does include tax. As for loss of service, what do you mean? Many single payer systems nonetheless have options for private healthcare.

 

[oldshadow]

In case you are interested what it's like in a two tier system I have public health care only and have no real need for private. If I go to my local doctor it is entirely free.

Good.

But are the taxes you pay making up for the free? And can you get the service I can?

Heath care is always going up like everything the best we is try and comtrol it some.

If you have single payer and like it more power to you.