Tuesday, June 05, 2012

HEALTHCARE: What It Costs Versus What Insurance Companies Have To Pay

  I make note to readers that I am currently in the process of surveying the local area hospitals here in the Tampa Bay area in order to see how much of a cost difference between paying in cash and using insurance exist. As of this time, it seems that nobody wishes to discuss the subject unless they are forced to.

By  Joan McCarter on Tue May 29, 2012

Yes, we still need a Medicare for all option for health care in this country. A Los Angeles Times story from the Memorial Day weekend spells out what happens when you have competing market interests intersecting, both hoping to maximize profits. In this case, hospitals and insurance companies.


That chart shows what a CT scan basically actually costs—the cash price if a patient wanted to bypass (or didn't have) insurance and paid the provider directly, versus what's basically quoted to insurance companies versus what insurance companies are actually billed.

The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400.

When The Times called for a cash price, the hospital said it was $250.

"It frustrates people because there's no correlation between what things cost and what is charged," said Paul Keckley, executive director of the Deloitte Center for Health Solutions,a research arm of the accounting firm. "It changes the game when healthcare's secrets aren't so secret."[...]

In the view of Robert Berenson, a senior fellow at the Urban Institute and vice chairman of the Medicare Payment Advisory Commission, big hospitals are exerting their market power to charge ever-increasing rates and major insurers go along with it because they can pass along the costs to employers and consumers. Insurance industry officials say that health plans negotiate the lowest prices they can, but that they also need to include prominent hospitals favored by customers in the network, and those institutions can command higher prices.

Providers say they jack up the prices of treatments to cover the uncompensated care they provide to the uninsured. They argue that they can avoid overhead and keep costs lower by offering a cash price for treatment, bypassing the insurance company billing process, and that, generally, they only offer the cash price to the uninsured. But it still all boils down to this: A thousand percent increase in the cost of a treatment versus what a patient and insurance company ends up paying for it happens. It might be greater or less depending on your hospital and your insurance company. Which is insane. It is no way run a health care system. Which, of course, outside of Medicare (and to a certain extent Medicaid) we don't really have in this country anyway.

The Affordable Care Act will help to level out some of this. For example, basic preventative services will provided for free to patients (well, "free" when they've already paid their premiums). But that doesn't mean those insurance companies won't end up being charged varying rates by varying providers of those services. The advantages will mostly be on the consumer side, which is critical, but the huge driving factors of this mess are barely touched, and the inefficiencies and irrationality of what we like to call a health care system in this country pretty much continue. It's a start, and it is helpig people, but it's not nearly enough.

Which again leads to the basic premise here: A single payer health care system that makes price-setting for procedures uniform, that takes out the vagaries of insurance billing and all the overhead involved in managing that billing for all the possible permutations of coverage, is the only rational option for controlling health care costs for everybody.

Originally posted to Joan McCarter