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Healthcare Insurance Industry

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The Anatomy of Healthcare Billing

June 9, 2013
inConsumer Driven Health Care, Disinformation and the healthcare system, Healthcare Insurance Industry, Medicine: Healthcare System, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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Stanley
Feld M.D.,FACP,MACE

The start of exposing the real cause of healthcare inflation has begun.  The billing and reimbursement system is
finally being questioned.

I hope the debate creates an uproar among consumers who are the most
important and most disadvantaged stakeholders in the debate. My hope is consumers will realize they
are pawns in the complex billing and reimbursement system created.

Consumers must also realize they have the power to demand control over their
healthcare dollars and not hope the government will protect them.

Steven
Brill’s article in TIME magazine started the debate. The demand for transparent
pricing has started.  Steve Brill’s
numbers are far from accurate.  However,the
pricing information is close enough to get consumers mad as hell.

The Centers for Medicare and Medicaid
Services finally released its massive database containing what 3,000 hospitals
charge for 100 of the most common medical procedures.

The database compares the hospital
“chargemaster” to the prices Medicare actually paid.

The reimbursement to hospitals is based
on the hospital system’s estimates of the actual hospital costs plus hospital
administrative overhead. These estimates are an error. The calculation should be the actual costs
and not an estimate of the actual cost.

The database only covers 100 of the
most common illnesses.

I have written about hospital
administrators’ salaries being in excess of 1 million dollars a year with many
being up to 15 million dollars a year. These salaries are included in the
overhead covered by Medicare payment.

I have questioned the appropriateness
of these massive salaries. In Boston there seems to be a contest between hospital
systems for which CEO gets a bigger salary.

Another important question is how many
hospital administrators in a hospital system get an excessive salary for the
value they add to medical treatment.

Who is worth more, a physician or a
hospital administrator?

 In many cases the
reimbursement by Medicare to some hospitals is 10% of the hospital’s billing.  In other hospitals the difference is 20-40%.

The payment gap between hospital charges
for procedures and Medicare payments is also stunning. The average difference
between hospital charges for the 100 procedures tracked and what Medicare’s
average actually payment is a difference of 72%.

A good metric is to beware of the man
that quotes average percentages if you want to understand the actual
difference.

The best example I have seen to visualize the variation of these prices
in simple terms is as follows.

 

“Imagine a banana in a supermarket. It costs $1 for those paying
with Visa, $3 for those paying with MasterCard, and $32 for those paying with
cash.

You can't sign up for Visa until you're 65, and you can only get
a MasterCard if you have a nice employer or a decent income.


Worse, customers have no
idea that such price discrepancy exists. They don't even know how much they'll
pay for the banana until long after they've eaten it.”


“That would be absurd. No
one would put up with it.


But it's how our health
care system works.”


Why should healthcare consumers in
America put up with it? Isn’t it the government’s job to protect us from this
abuse and not have a system that encourages it? Obamacare claims to stop the
abuse as it has been going on its merry way to encourage it.

This is not the entire grizzly story.

The average prices by states shows
massive discrepancies. In California, the average hospital charges $101,844 to
treat respiratory infections. In Maryland the average price for the same respiratory
infection is $18,144. The difference is 82% for the same disease in two
different states. The government is the same payer for both states.

 New Jersey hospitals bill an average for
$72,084 for "simple pneumonia," while Massachusetts’ hospitals charges
an average of $20,722. Neither of the state’s hospitals receives that much
reimbursement for treating these infections from Medicare. However, New Jersey
hospitals receive more.

Uninsured patients and the indigent
without insurance are getting the shaft. These people will have to pay retail
hospital prices or get sued by the hospital system.

None of the hospital prices are
transparent. A patient cannot even beg the hospital system to get a price.

Many treatments can be administered as
an outpatient. The government pays at least three times more for chemotherapy
in a hospital setting or a hospital outpatient clinic as it would to a freestanding
private outpatient oncology clinic.

 What’s the deal? The government doesn’t
trust physicians. It is afraid physicians will overcharge.

What does the government think the
hospital systems are doing?

I have also written about primary care
physicians’ salary being about $100,000- $120,000 a year. Surveys of physician
salaries have shown salaries varying between $100,000 to $600,000 per year. Surgical
subspecialists receive more than primary care physicians.

Let us assume the average physician’s salary
is $300,000 per year. There are approximately 600,000 practicing physicians in
the U.S.

The total physician reimbursement is $180
billion dollars a year in a $2.7 trillion dollar industry. This is less than
10% of the total dollars spent. Even if you doubled physicians’ salaries to
include an overhead of 50% physicians receive 13.2% of the healthcare dollars
spent.

A major question is where is the
remaining 2.5 trillion dollars going?

The healthcare insurance companies take
40% off the top of all care delivered including Medicare and Medicaid and other
government programs. They do all the government administrative services and
hide the fees through deductions that should go to expenses but with the
government’s permission go to direct patient care.

The most important metrics are never
discussed and inaccurately measured. 
They are clinical outcomes and quality of procedures performed with
respect to financial outcomes.

The reason this measurement is not done
is because there is no accurate definition or measurement of these metrics.
Clinical outcomes as it relates to cost of care has to be included in the
measurement of quality of care.  No one
knows how to do this.

How does all this get fixed?

Consumers must drive the healthcare
system. My ideal medical saving account would go a long way in
dis-intermediating the healthcare insurance industry.

An easy to use web site should be constructed
using the Travelocity, Expedia or the Orbitz formula.

All hospital and physicians’ prices
should be online. All insurance and government reimbursement should be
published on this web site, plus
insurance premiums and their justifications. The real government overhead
should also be available to consumers. 

A government web based educational
program to make consumers smart medical consumers would decrease healthcare
costs immediately.

All of the above would be a good start.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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Surprises For Physicians Coming With In Health Insurance Exchanges

May 8, 2013
inHealthcare Insurance Industry, Medicine: Healthcare System, Stakeholder Mistrust
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Stanley Feld M.D.,FACP, MACE

 Two
important components of Obamacare are Accountable Care Organizations (ACOs) and
Health Insurance Exchanges (HIEs).


The
adoption of both by medical communities and the states has been slow for good
reason.

I have
discussed the difficulties of setting up and the executing effective Accountable
Care Organizations.

Some hospital systems are trying to set up ACO’s. These hospital systems
are buying up physicians’ practices and trying to develop integrated care
organizations.

The hospital systems are buying the physicians’ intellectual property and
surgical skills sets. It will not work once physicians realize what happened.

The relationship between community hospital systems and practicing
physicians had always been tense. Physicians do not trust hospitals and hospitals
do not trust physicians.

Some physician groups are trying to develop their own ACOs. They are trying
to convert hospital systems from being providers of patient care to vendors for
their physician ACO.

If there are two hospitals in a community or town the hospital systems
might become competitive.

The huge problem for physicians is the assuming of risk. If healthcare
insurance companies cannot manage risk, why would physicians think they can
manage risk?

 A variable that cannot be controlled
in managing risk are patients. With all the obesity and the increase in
diabetes mellitus it seems patients do not have the incentives to manage their
own risks.

 Patients and physicians must be provided with appropriate financial
incentives if there is the slightest chance of managing risk and decreasing the
cost of healthcare.

 The adoption of ACOs has been slower than the Obama administration has anticipated.
  

 Adoption
of the Health Insurance Exchanges has been slow by states. Some states
recognize the financial risk the Obama administration is trying to force on
them.

This
risk is ever present even if the federal government is going to pay the entire
bill for the first three years.

As soon as physicians realize
the risk the Health Insurance Exchanges are going to impose on them, they will
not be willing participate.

These risks become more
apparent will each succeeding release of regulation.

Kathleen Sebelius said it two
weeks ago when she said there would be plenty of surprises ahead for physicians.

“Health
and Human Services Secretary Kathleen Sebelius, who told a gathering a few
weeks ago at the Harvard School of Public Health that she has been
"surprised" by the political wrangling caused so far by Obamacare,
there are likely to be plenty of surprises ahead.”

Physicians could face dramatic
financial challenges for treating patients who receive health coverage through
the Affordable Care Act's (ACA) Health Insurance Exchanges starting next year.

“ Insurance companies will not
process claims on patients who haven't paid their premiums in 3 months, leaving
doctors on the hook to recoup payment directly from the patients.”

Obamacare provides a 3-month grace
period to individuals who haven't paid their premiums for insurance purchased
through the Health Insurance Exchanges.

This provision will prove to be a
problem for physicians.

In Obamacare patients who fail to
pay their premium are free to sign up for another plan provided by the Health Insurance
Exchange.  

They can also start seeing another
physician without the insurance company or new physicians being aware of the
patient’s delinquent premium record.

"Why would a doctor sign up to treat these patients] if
they're going to be completely at risk and have to collect from the patient
directly for their care?"  "This
is a really bad provision in the bill, and we've got to get it fixed."


Under traditional insurance provided
by employers, the plan is still liable for paying doctors even if the patient
or employer hasn't paid their premiums,

Under the health insurance exchange
the individual is responsible for their monthly premium. If the patients
discontinue payment of their premium the healthcare insurer is not obligated to
pay the physician for the care provided.

Most of the time patients have stopped
paying premiums because they cannot afford them. Patients buying healthcare
insurance from the Health Insurance Exchanges are lower income producing
patients. 

 The
expected annual, out-of-pocket cost for an individual is estimated to be around
$6,400 and $12,800 for a family. This is not an insignificant expense for low
wage earners.

Recent premium estimates indicate
that the premium will be higher. This could be one of the surprises Kathleen
Sibelius is referring to.

Another potential shortcoming of the
Health Insurance Exchange is the reimbursement rates provided to physicians.
The Obama administration believes Medicaid rates are sufficient.

I wonder if any of President Obama’s
healthcare policy wonks ever questioned why so many physicians do not accept
Medicaid.

The answer is simple. The
reimbursement rate is less than the physicians fixed overhead to see the patient.

Medicaid physicians are driven to
see many patients a day to try to make a living.

It would be difficult maintaining a
physician patient relationship and a high quality of care seeing over 100
patients a day.

When their overproduction is
discovered these physicians are investigated for fraudulent practices.

 The rates the healthcare insurance industry
will pay physicians will not be set until late summer.

The big provider groups are negotiating with plans on their
payments. Small groups will only get a "take it or leave it" contract
from the health plans.

It seems obvious that fewer
physicians will sign up to accept patients receiving coverage through the
Health Insurance Exchanges once physicians understand what Obamacare is doing.

 This will result in a further physician
shortage.

 The simple question is what is Obamacare
trying to do to the healthcare system?

 Is Obamacare trying to destroy the
healthcare system?

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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Facts and Misuse Of Facts

March 9, 2013
inDefective scientific studies, Healthcare Insurance Industry, Medicine: Healthcare System
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Stanley Feld M.D.,FACP,MACE

All of us try to understand
the facts and make logical decisions by synthesizing the facts.

There is a lot of
misinformation and disinformation being printed. This misinformation and
disinformation leads to the wrong conclusions because the facts are inaccurate.

 A master purveyor of this misinformation and
disinformation is Paul Krugman.

I believe his misuse of
facts is icreasing as he is subconsciously realizing his ideology is incorrect.

Here are a few examples of
disinformation or misinformation in Paul Krugman’s most recent article “Mooching
off of Medicaid” 

“For there
is a lot of price-gouging in health care — a fact long known to health care
economists but documented especially graphically in a recent article
in Time magazine. “

This is true. The margins on hospital systems
retail prices are outrageous. The margins on some discounted hospital system prices
are equally outrageous.

 There is a continuous price war between hospital
systems and payers (government and healthcare insurance companies).

 The uninsured and under insured primary stakeholders
(consumers) are stuck with these outrageous prices.

"As Steven
Brill, the article’s author, points out, individuals seeking health care can
face incredible costs, and even large private insurance companies have limited
ability to control profiteering by providers."

 This statement is not quite true. Most people
have healthcare insurance. The healthcare insurance industry and government
have negotiated discounted prices that are as low as 10% of the retail prices
published in Steven Brill’s article.

In the struggle to retain providers, private
insurance companies offer slightly higher prices than the government.

The healthcare insurance industry knows the
government’s exact reimbursement prices. The private insurance companies
provide the administrative services for the government’s healthcare plans.

Individuals not under the umbrella of these discounted
prices are liable for these high prices. As insurance premiums increase,
employers are reducing insurance coverage for employees.

The deductibles and co-pays are increasing to unaffordable
levels for everyone as an increasing numbers of employees are becoming under insured.
 

 “For there
is a lot of price-gouging in health care —"

 Price gouging is the result of a lack of
transparency and special deals the government and the healthcare insurance
industry makes with certain hospital systems   

“Medicare
does much better at preventing price gouging , and although Mr. Brill doesn’t point this out, Medicaid — which has
greater ability to say no — seems to do better still”.

 This is false. There are fewer physicians
seeing Medicaid patients because reimbursement is very low. In fact, in most
cases physician reimbursement is lower than physician overhead. The result is
access to care for a Medicaid patient is restricted. The access to care for
private insured patients is not.

Hospitals receive a bonus for
seeing Medicaid patients. This fact is not transparent and known by few.

 “And
despite some feeble claims to the contrary, privatizing Medicaid will end up
requiring more, not less, government spending”,

Paul Krugman makes declarative statements as if
they are unequivocal evidence. 

 “because
there’s overwhelming evidence that Medicaid is much cheaper than private insurance.”

The evidence in Paul Krugman’s quoted study is
not that overwhelming.

I reviewed this 2008 study. The demographic
difference of the Medicaid group compared to the privately insured group is
different. The difference can reveal alternate conclusions.

 


Jpeg demographics krugman
 

Note the demographic differences of the Medicaid
vs. Private insurance patients.

 

Heath status good 
    53.5% vs 41.2%

Mental health             17.4 % vs 
6.4%

Hispanic                     23.4% vs 16.9%

African American        27.5%
vs 16.4%

White                          49% vs 66%

Employed                   48% vs 74.6%

No hi school degree   36.7% vs 17.2%

Married                        33.6% vs 51.7%

Income less than poverty 62.3% vs 22.2%

 

An alternate conclusion could be that it is too
difficult for Medicaid patients to find a physician. Medicaid patients are more
poorly educated. The do not seek physicians’ help compared to the privately
insured group. Medicaid patients cannot afford the minimal out of pocket
expenses.


Jpeg 2 costs

 

To my amazement the unadjusted annual per person
Medicaid spending was higher in this article for the Medicaid insured group
than the privately insured group by $1000.  

Paul Krugman states Medicare
and Medicaid have lower administrative costs.

“Partly
this reflects lower administrative costs, because Medicaid neither advertises
nor spends money trying to avoid covering people”.

 He goes on to say.

 “But a lot
of it reflects the government’s bargaining power, its ability to prevent price
gouging by hospitals, drug companies and other parts of the medical-industrial
complex.”

The government does have
bargaining power. However reimbursement to physicians is so low that it is
difficult for Medicaid patients to find a physician.

This could be a reason
Medicaid costs are lower than privately insured patients with a high school
education and a job.

Acute care hospitals have a
10% Medicaid threshold. They can also be eligible for incentive pay.

 “In addition, to be eligible to receive a
Medicaid EHR incentive payment, acute care hospitals must also meet a 10
percent Medicaid patient volume threshold.”

Paul
Krugman and others conclude,

“Our nation cannot control runaway medical spending without
fundamentally changing how physicians are paid.”

Physicians receive only 9% of healthcare
dollars spent. The real facts are physicians write orders for the inflated services
of the hospital systems without receiving financial benefit. In fact, the
government restricts physician participation. Physicians’ reimbursement
decreases yearly.

It is very easy to draw the
wrong conclusions when relying on inaccurate facts from so called experts.

The real challenge is to
dig down and get the correct facts.

This is not done because
ideology, non-transparency and bias stand in the way. This contributes to the
healthcare system becoming more dysfunctional and costly each year.

 Healthcare policy errors are made because
policy is made using incorrect facts.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.



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The Destruction of Private Healthcare Insurance

January 9, 2013
inHealthcare Insurance Industry, Medicine: Healthcare System, Stakeholder Mistrust
• Leave a comment

Stanley Feld M.D., FACP, MACE

One of these days Americans
are going to pay attention to how President Obama is destroying private
healthcare in America.

Many people will fine this
hard to believe because he is such a nice guy and many people like him.

He is making the healthcare
insurance industry destroy itself by forcing them to increase healthcare
insurance rates.

The destruction is so well
designed that the public cannot take notice. The healthcare system will not be
more affordable or accessible to anyone in the nation.

The changes will provide
President Obama with another tool to redistribute wealth and increase the individual’s
dependence on the federal government. This defines President Obama’s goal in affecting
all areas of our life.

Americans are on the Road To
Serfdom.

I remember Barney Frank and
John Kerry saying that healthcare reform would not work without a “Public Option.”
I also remember President Obama saying we can make it work without a “Public Option.”

President
Obama’s original plan was to eliminate private insurance. Americans would have
no choice but a “Public Option.”  (National Health Plan)

 

 Kathleen
Sebelius, the secretary of health and human services
said, she “retains authority to make the
final decision” on insurance rates if she finds that a state acted in an
arbitrary or capricious way in denying a rate increase sought by a nationwide
health plan.

 

This is the first time I
have seen President Obama’s administration use the words “National Health
Plan.”

It was obvious President
Obama was not truthful when he said “if
you like your physician you can keep him” and “if you like your healthcare insurance you can keep it.”

Congress made a gigantic while
passing Obamacare and transferring all healthcare policy decision making power
to the executive branch of government.

President Obama’s goal is to
have complete control over the healthcare system. He wants to force the private
healthcare insurance industry out of business. He wants to socialize the entire
medical care industry into a single party payer system.  The government will be the single party payer.

Healthcare will then be a
ubiquitous entitlement program that the government cannot afford unless it increases
taxes entire population according to the taxpayers means.

This is the pattern behind many
of the articles written in isolation by the traditional media.

The unintended consequences
resulting from each policy change will be overwhelming.

I have been fascinated by President
Obama’s negotiating strategy.  

Americans are going to wake
up to the fact that President Obama has increased taxes for the funding of
Obamacare by $1 trillion dollars over the next ten years aside from the tax
hikes effective January 1st.

Americans are going to wake
up and feel deceived by President Obama when they realize they are getting
little for their increased taxes except government control over their freedoms.

I predict President Obama’s
plans will blow up in his face.

Consumers will protest when
they recognize the impact these multiple new taxes will have on their
discretionary income. President Obama will not get the funding he needs from
congress.  

His physician workforce will
not cooperate. Hospitals are starting to wake up and are seeing they were
deceived. They thought they would do better because they have bought physician
practices.

Recently they automatically
received cuts in reimbursement while the doctor fix was extended for another
year. Physician reimbursement will be cut and the physician workforce will
dwindle.

On Friday afternoon November
30th 2012 the Obama administration pulled a stunt on the healthcare
insurance industry.

“The Obama administration
said Friday that it would charge insurance companies for the privilege of
selling health insurance to millions of Americans in new online
markets run by the federal government.”

The cost of these “user
fees” can be passed on to consumers. The proposed fees could add 3.5 percent to
premiums for private health plans sold in insurance exchanges operated by the
federal government.

The "user fees" are another tax to consumers.

The government is
disregarding the fact that healthcare insurance premiums are too high for
employers to provide healthcare insurance for employees now.

Employers are opting to drop
healthcare insurance coverage and pay the government penalty. Some are dropping
healthcare insurance and avoiding the penalty by decreasing the number of
employees to under 50 employees or decreasing employees work hours to under 30
hours per week.

This will increase, not
decrease the tax burden on the consumer.

The exact effect of the
health insurance exchange on the healthcare industry is muddled.

It looks as if President
Obama is rapidly moving toward a “Public Option.”

Consumer advocates, insurers,
and some state officials had expressed concern about delays in publication of
the rules for this new proposal.

President Obama has used
this is the same tactic before. Consumers and agencies must accept the changes
before the rules are published.

Consumers and state
governments do not trust President Obama. They are afraid to say yes when they
do not know what they are saying yes to. In the end it  looks like the state governments and the
consumers will get stuck with the bill and the federal government will have
complete control over the healthcare system.

CMS said. “These plans will
be offered by private insurance companies under contract with the United States Office of Personnel Management. The agency already provides insurance to eight
million federal employees, retirees and dependents.”

The scary part is the administration said,
“It (the government) retains
authority to make the final decision” on rates if it finds that a state acted
in an arbitrary or capricious way in denying a rate increase sought by a
nationwide health plan.”

The term “Nationwide Health Plan” and “final authority” sounds as if the
government is taking over.

The federal government will
also have control over physicians and hospital fees.  It will also control access to care and the
rationing of care.

It is almost too late for
consumers to wake up.

No one can say President
Obama didn’t tell us.

It can only be said the plan
was so obfuscated, final rules so delayed and unsubstantiated promises made and
not publicized on a Friday afternoon the week after Thanksgiving that the
public did not understand what was going on and could not express an opinion.

The games President Obama
and his administration play are dizzying. The irresponsibility of our elected
congressional officials who are supposed to be our surrogates is
unconscionable.

   The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.



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Permalink:

Price Competition for Medical Care

December 9, 2012
inDisinformation and the healthcare system, Healthcare Insurance Industry, Innovations in Healthcare, Medicine: Healthcare System, Stakeholder Mistrust
• Leave a comment

Stanley Feld
M.D.,FACP,MACE

Thank goodness many physicians are starting to recognize the problems of abuse
and waste in government run healthcare programs.  The run up in cost is secondary to the
healthcare insurance industry taking 40% of the healthcare dollars off the top
as patient care dollars and the hospital systems over inflating the costs to
patients because of inflated operating expenses and administrative salaries.

Physicians realize that an efficient free market system will reduce the
cost of care. Physicians are tired for being blamed for the entire healthcare
systems problems. They do not deny being part of the problem.

Many physicians have decided to move forward and develop consumer driven
free market systems of care. 

One example is Nextera Health in Longmont Colorado. I have discussed this
previously.

Nextera Healthcare
is a new model for delivering primary care at an affordable price. It follows
many of the principles embodied in my ideal medical savings account
model.  Nextera delivers compassionate care at an affordable cost and
encourages patients to be responsible for their health.

Nextera
Healthcare services all of a families needs at an affordable monthly cost. It is
combined with a high deductible healthcare insurance plan to cover costly
illness.  

The
reason I am so high on Nextera Healthcare is that it closely fits a model of
healthcare delivery that will work to decrease the cost of medical care. It
will increase the quality of medical care and permit primary care to be a
viable specialty. 

Nextera Healthcare has the potential to permit the patient
to be responsible for managing their health and their healthcare dollars.

Nextera
Healthcare has the potential to reduce healthcare cost to individuals, employer
sponsored self insured plans, associations and even government funded
healthcare plans while permitting consumers to make their own healthcare
decisions.

Surgeons are developing their own innovative systems.  In free standing surgery centers they are
developing surgical procedures that cost at least 70% less than Medicare is
paying hospitals for the same procedure.   

 Dr. Keith Smith, co-founder and managing
partner of the Surgery Center of Oklahoma, took
an initiative that would only be considered radical in the health care
industry.

Dr. Smith posted a
list of prices online for 112 common surgical
procedures. Dr. Smith ,an anesthesiologists, became disillusioned about how
patients were treated and charged at St. Anthony Hospital in Oklahoma City.  

Dr. Smith’s goal
was to create a for-profit facility that could deliver first-rate care at a
fraction of what traditional hospitals charge. The goal was to eliminate the
hospital and healthcare insurance industry as the middlemen while decreasing
the cost of surgical care without decreasing the quality of care.

He wanted to create a system in which consumers and their employers
could receive surgical value at an affordable price. In the existing healthcare
system patients have no incentive to look for dollar value.

A healthcare system in which consumers buy goods or services from a
physician, surgeon or hospital systems all being paid for by the healthcare
insurance industry or government does not constituent incentive for consumers
to seek value and quality.

The lack of patient responsibility and value hunting is one of the major
causes of exploding U.S. heath care costs.

Physician owned transparent Surgery Centers are becoming increasingly
common as Americans look for alternatives to the traditional health care market
which is unaffordable and out of reach.

Consumer-driven models are appearing as fewer people have healthcare
coverage from their employers and are on their own

The unintended consequences of Obamacare are creating more uninsured not
less. The Medicaid insurance coverage that Obamacare is offering is
unappealing.

Patients may have no choice but to look outside the traditional health
care industry in the face of higher costs and reduced access to doctors and
hospitals. It is only going to get worse as we get deeper into Obamacare.

The Oklahoma Surgery
Center demonstrates that it’s possible to offer high quality care at low
prices. Surgeons can do twice as many surgeries in an outpatient surgery center
than they can in a traditional hospital surgical suite.

Most industries
try to improve efficiency. However, simple efficiencies have not occurred in
most traditional hospitals. Surgeons spend half their time waiting for the
patients to come to the operating room or for the availability of operating
rooms and equipment.

The Surgery
centers have solved these efficiency problems. They can service surgeons’ needs
at less than half the cost without the wasted time.

A key reason is
there are not multiple administrators creating multiple regulations and
collecting multiple $500,000 to $3 million dollar a year salaries. Surgical
centers have one head nurse responsible for everything and zero administrators.

The cost of a “complex
bilateral sinus procedure” at the Surgery Center was an all-inclusive $5,885.
The traditional hospital bill totaled $33,505 without the surgeon’s and
anesthesiologist’s bill included.

It was discovered
at the time of the nasal surgery that the hospital charged $360 for a
dexamethasone injection. A dexamethasone injection cost the hospital $.75.

 A fentanyl shot which is a pain-killer cost the
hospital system $1.50 but the bill to the insurance company was $630.00 dollars.
Everyone has heard of the $45.00 hospital aspirin   

A traditional
hospital discounted non-inclusive bill to the healthcare insurance industry for
a carpel-tunnel release would be $7,452. The fee for the procedure pre-op is
not be available. The same procedure done for the all-inclusive transparent
cost at the Surgery Center was $2,775.

More tragic was
that the patient would have had to pay $5,299 out-of-pocket  to cover her deductible and co-pay for the
hospital bill before she even received the bills for physicians’ services. 

Below are some
examples of the differences in costs for procedures.

 
Transparency-Matters-larger jpg
A list of the surgical fee for the Oklahoma Surgery Center is on its web
site. http://www.surgerycenterok.com/pricing.php

How do hospital systems get away with this?

The more the hospital bills the more the insurance company puts in reserve.
The reserves are in the medical costs column and include the non-discounted
costs. The result is greater profit for the insurance company.

President Obama does not want physicians to be innovative in this way.
He wants physicians to be dependent employees of hospital systems. His goal is
to control physicians and dictate their medical care.

President Obama has provided some non-transparent favors to hospital systems
that are forcing physicians to be employed by hospitals. 

"A new provision buried in Obamacare effectively prohibits doctors from starting their
own hospitals or expanding the hospitals they already own, which has been
widely interpreted as a give-away to the American Hospital Association."

Hospital systems claim they must charge more to cover their overhead and
bureaucratic inefficiencies. So fix your system. Surgery centers have.

Dr. Smith says: "Everyone can
see what the prices are at the Surgery Center, and that affordable health care
is possible. So the jig is up.”

Dr. Smith believes that despite the obstacles being put in the way by
Obamacare, market-driven facilities like his will thrive and proliferate as
consumers catch on to costly collusion between big government and big health
care.

I totally agree. As Obamacare’s unintended consequences proliferate
consumers and captured physicians (hospital employed) will pay more attention
to physician innovation. The jig for big government and big healthcare will
certainly be up.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

Please have a friend subscribe

 

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  • Granny Asians • October 22, 2013

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What Is The Insurance Value Of Medicare?

November 19, 2012
inHealthcare Insurance Industry, Medicine: Healthcare System, Politicians,Healthcare and Vested Interests
• Leave a comment

Stanley Feld M.D.,FACP,MACE

 

Healthcare insurance is
great if you do not need it.

The wonderful thing
about Medicare is private insurance is not available to seniors.  

Healthcare insurance companies
are not interested in covering consumers with health risks or preexisting
illnesses.

In fact private
individual healthcare insurance policies are not available to an unemployed 55
year old person with mild obesity and hypertension.

If you are employed and
over 65 years old with mild obesity and hypertension the healthcare insurance
industry is required to insure you under your employer healthcare plan.

The employed person
receives healthcare coverage with pre-tax dollars.

 A person who might be
eligible to purchase individual healthcare insurance must pay with after-tax
dollars.

This is unfair but
easily corrected.

The pre-tax/post tax
issue could be solved if the state insurance boards required the healthcare
insurance companies, wanting to sell private insurance in that state, cover
everyone applying for insurance. The insurance company should be required to
set the premiums based on community rating.

Everyone should pay
premiums with pre-tax dollars.

Medicare, through
government inefficiency, has become very expensive. If it were efficient
insurance it would be less expensive to both consumers and the government.

Most working people have
no idea of Medicare’s cost to them during their working years.

Medicare’s yearly tax
withholding is 1.45% of salary. A worker earning
$100,000 a year pays $1450 yearly to the Medicare Trust Fund. In 40 years that
person would pay $58,000 into the Trust Fund.

When they became eligible
for;

 Medicare Part B the yearly premium in 2012 was
means tested.

 

If your yearly income in 2010 was

You pay (in 2012)

File individual tax return

File joint tax return

$85,000
or less

$170,000
or less

$99.90

above
$85,000 up to $107,000

above
$170,000 up to $214,000

$139.90

above
$107,000 up to $160,000

above
$214,000 up to $320,000

$199.80

above
$160,000 up to $214,000

above
$320,000 up to $428,000

$259.70

 

 

 

In
2013 the Medicare Part B premiums are going to increase.

 

 

 

 

 

 

 

 

 

 

 

 

 
   

 

 

 

 

 

If your yearly income in 2011 was

You pay (in 2013)

File individual tax return

File joint tax return

$85,000
or less

$170,000
or less

$104.90

above
$85,000 up to $107,000

above
$170,000 up to $214,000

$146.90

above
$107,000 up to $160,000

above
$214,000 up to $320,000

$209.80

above
$160,000 up to $214,000

above
$320,000 up to $428,000

$272.70

above
$214,000

above
$428,000

$335.70

 

Income is defined as
income from all sources such as capital gains, interest, pension annuities,
social security and all earned income.

Further premium increases have been announced for 2014 but
have not been published.

Medicare premiums are
taken out of each Social Security check.

The Medicare Part B
insurance has deductible and co-pay rules. Medicare Part B deductibles apply
for each hospital stay, ER visits and physician office visits.

For each benefit period
you pay:

  • A total of $1,156 for each hospital admission of
    1-60 days.
  • $289 per day for days 61-90 of a hospital stay.
  • $578 per day for days 91-150 of a hospital stay
    (Lifetime Reserve Days).
  • All costs for each day beyond 150 days.
  •  

Skilled Nursing Facility
Coinsurance

  • $144.50 per day for days 21 through 100 each
    benefit period. Days 1-20 are free.
  •  

Part B: (covers Medicare eligible physician services, outpatient
hospital services, certain home health services, durable medical equipment)

  • $140.00 per year. (Note: You pay 20% of the
    Medicare-approved amount for services after you meet the $140.00 deductible.)

 

The deductible for the
first $140 dollars worth of services plus 20% of any physicians and hospital
bill can add up as one gets older. It becomes unaffordable for many seniors.

 

Medicare Part B’s deductibles
and copays’ costs makes Medicare gap coverage   essential.

Premiums For Medicare Part
F   

Policy Summary

Monthly Premium:
$84 – $302  depending on age and benefits

Estimated Annual
Cost: $6,050.00

Benefits

  • Basic Benefits Medigap
    Basic Benefits definition[?] – Opens in a
    new window
  • Skilled Nursing Facilities Skilled
    Nursing Facility definition[?] – Opens in a
    new window
  • Part A Deductible Part
    A (Hospital Insurance) definition[?] – Opens
    in a new window
  • Part B Deductible Part
    B (Medical Insurance) definition[?] – Opens
    in a new window
  • Part B Excess Charges (100%)
  • Foreign Travel Emergency
  • Preventive Services

 Medicare
Part D is the drug benefit plan. Medicare Part D helps reduce the cost of
medications.

Medicare
Part D is also means tested. There are multiple plans to pick. Some include
complete payment for brand named drugs and some cover the donut. The price can
range from $40 to $120 per month per senior depending on the coverage a senior
picks. The additional means tested fees are below.

The
brand named drugs are expensive. Most drug chains have followed Wal-Mart’s lead
and charge $4.00 for generic drugs. This forces seniors to purchase generic
drugs

Medicare
Part D is expensive and unfair for seniors needing brand named drugs.

The Means Testing Formula For Medicare
Part D 2012

 If your yearly income in 2010 was

You pay

File individual tax return

File joint tax return

$85,000
or less

$170,000
or less

Your
plan premium

above
$85,000 up to $107,000

above
$170,000 up to $214,000

$11.60
+ your plan premium

above
$107,000 up to $160,000

above
$214,000 up to $320,000

$29.90
+ your plan premium

above
$160,000 up to $214,000

above
$320,000 up to $428,000

$48.10+
your plan premium

above
$214,000

above
$428,000

$66.40
+ your plan premium

 http://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html

 Medigap
fees and Medicare Part D fees are paid with post tax dollars.

These
costs are in addition to seniors having contributed $58,000 to the Medicare
Trust Fund during their working years.

“The reason we have
health insurance at all is not that health care is expensive, but rather that
there is great uncertainty about who will need very expensive and potentially
lifesaving care and when they will need it. Medicare should give beneficiaries
not just access to medical care, but also protection from the risk of
catastrophic spending.” 

Medicare
coverage is not cheap. President Obama’s Obamacare is going to make it more
expensive with less access to care.

 Why
is Medicare Part B,F,D  so expensive when
the average person on Medicare spends only $6,600 dollar per year?

This
is the major question. The government should focus on the answer. It should not
be spending time and money on a system that is punitive to patients and
physicians and has little chance of being successful.

The
money creating the Medicare deficit is going somewhere. Where?

The cost to Medicare beneficiaries is high.
The protection against economic ruin is limited. The basic benefit lacks a cap
on out-of-pocket spending, so beneficiaries are exposed to the risk of
open-ended cost sharing that can generate substantial financial strain (or
deplete assets for surviving spouses).1 

Moreover,
the odds of facing a catastrophic expense mount over time. Almost 50% of
beneficiaries are hospitalized at least once over a 4-year period.2 

If
we are going protect our seniors from financial strain or ruin Medicare must
reassess it premises and reduce its administrative waste. It must be completely
transparent. If the government did it correctly it would provide an affordable
healthcare insurance plan for seniors.

“Everyone knows the dice is loaded.”
Leonard Cohen.

  

http://youtu.be/GUfS8LyeUyM

 

At
the moment seniors do not have another choice. It is the only game in town.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

Please have a friend subscribe

 

 

 

 

 

  • Julie Anderson • November 20, 2012

    Healthcare policies must even beneficial to the seniors but they shows the less interest and they concentrate on the other categories.\They show the less interest because these are already with the problem and with them we will have no benefit!!!
    Medicare

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Business Model For Medical Care 2020. The Ideal Future State

October 28, 2012
inEMR, Health Savings Accounts vs Medical Savings Accounts, Healthcare Insurance Industry, Information Technology in Healthcare, Innovations in Healthcare, Medicine: Healthcare System, Summary Blogs
• Leave a comment

Stanley Feld M.D.,FACP,MACE

 

Please click on all the links to study
the references to each spoke. It will help you visualize the power of the business
model.

The ideal future state business
model for the healthcare system must include the execution of ideas in the specific spokes outlined below.. These spokes
will serve to align all of the stakeholders’ interests.

Slide16
The business model must
contain appropriate rules for a consumer driven healthcare system, an ideal
electronic medial record, and an ideal medical savings account.

The ideal medical saving
accounts can work optimally when there is significant tort reform and patients
take full responsibility for their health and healthcare dollars.

Consumer education is critical to the business
model of the future. Educational modules can be available to consumers 24/7 via
the Internet. These educational modules must be an extension of consumers
physicians’ care in order to be effective. The education can become available
using a series of social networks.

Chronic disease self-management education can
be achieved by the use of interactive online teaching programs. Patients can be
linked to share their disease experience through private social networks.

Most believe that the healthcare system must
have greater integration of care. This integration of care can be done
virtually through a series of private integrated networks.

Effective integration can be achieved without
disruption of the entire healthcare system. Obamacare has been disruptive to
the entire healthcare system.

Obamacare is forced integration by the
government will be slow, costly and unsuccessful.

Physicians must be compensated for the presently
uncompensated time necessary to execute each one of the spokes of the wheel.

Each spoke is necessary to convert the
healthcare system into a system that once more makes the physician patient
relationship paramount.

The future business plan removes control of the
healthcare system from the government. It permits the patient to have the freedom
to choose his own healthcare course.   

Tort reform is vital to the 2020 business model.
It will decrease costly over-testing to avoid frivolous malpractice suits.
There are many ways to set up a tort reform system that truly protects patients
from real harm while eliminating over-testing. It limits the malpractice
litigation system. Punitive damages must be lowered. Losers in lawsuits must
pay all fees. These two provisions will decrease lawyers’ incentive to sue.

 
Slide24

Consumer driven healthcare will create a system
that promotes personal responsibility by the consumers’ for their health and
health care dollars.

 
Slide19

The major spoke necessary to successfully
accomplish a consumer driven healthcare system is my ideal medical saving
accounts.

 
Slide18

 

The ideal medical savings accounts would
provide the financial incentive for consumers to drive the healthcare system.
It would dis-intermediate the healthcare insurance industry’s grasp on first
dollar coverage and profits. The insurance industry would realize that its
profit margin would increase under this system.

In order for consumers to be in a position to
lower the cost of healthcare they must be taught to understand how to self
manage their disease and be responsible for the decisions they make in their
choices for medical care.

Slide20

In order to decrease patients’ dependency on
the government and increase  being
responsible for themselves, a system of education using information technology
as an extension of their physicians’ care has to be developed and put into
place.

Social networking is in its infancy at present.
It must be developed and used as an educational tool between physicians, patients
and physicians, and patients and patients.

All the social networking must be an extension of
the physicians’ medical care to their patients. Social networking must be
developed to enhance and promote the physician/patient relationship because
this relationship is critical, at its core, to successful medical treatment.

Social networking and information technology
can extend physician educational resources for patient care.

Slide21

Systems of care for the self-management of chronic
disease as an extension of their physicians care have already been developed.
The unsuccessful chronic disease self-management systems are the programs that
are not an extension of physicians’ care. The reason these third party systems
are unsuccessful is because they undermine the patient physician relationship.

President Obama has done pilot studies using
those third party self-management companies to prove that chronic disease
self-management systems work. They have all failed to reduce the cost of care.

Therefore the administration has reached the
conclusions that self-management of chronic disease does not work. Nothing
could be further from the truth. The government simply does not understand the
magic of the physician-patient relationship.

Slide22

In order to decrease the cost of medical care,
medical care must be integrated. At present, primary care physicians recommend
specialists. The primary care physicians know whether the specialists are doing
a good job by the specialists’ treatment results with their patients.

Most of the time physicians do not know their
specialists’ fees. These fees must be totally transparent to primary care
physicians and their patients. The primary care physicians can then be in a
position to help their patients choose appropriate specialists.

It will also reduce the specialists’ prices
because they will be forced to become competitive by the patients in a consumer
driven system.

Hospital fees must also be transparent. One of
the reasons I am opposed to hospital systems hiring physicians and paying them
a salary is the hospital systems would then be able to develop a monopoly in a
town or area of town. This would permit the hospital system to raise prices
without informing patients or physicians.

Hospital systems could erase physicians’ choices
and hindered patients from having the freedom to choose a hospital or
specialist of their choice with their primary care physicians. It devalues the
patient physician relationship.  

 
Slide23

The way President Obama is going about
developing a universally functioning electronic medical record is foolish and
costly. Most physicians cannot afford a fully functional electronic medical
record. This fact is being used to drive physicians into being employees of
hospital systems. The problem is hospital systems are paying hundreds of
millions of dollars for electronic medical records that are not fully
functional.

Many of these records are hard to use and
provide inflexible data. The inflexible data leads to healthcare policy
decisions that are wrong. The data is also used to commoditize medical care.

Commoditized medical care is not the best quality
of medical care.  

If the government is so smart it should develop
a fully functional electronic medical record and provide it to all hospital
systems and practices for free.

The EMR should be put in the cloud. Providers
should be charged by the click. The government can service and upgrade the EMR
in one place and improve the quality of data collected. The data should be used
for educational purposes only and be owned by the patients and physicians. It
should not be used for punitive purposes. The inaccurate data is now used for
punitive purposes. The result has been a lack of physician cooperation.

 
Slide17

The healthcare journey to an ideal future state
must begin in an orderly way. The principle goal is to be consumer centric. It
must be consumer driven and force the secondary stakeholders to be transparent
and competitive.

This journey will wring the excess costs out of the healthcare
system. It will create a democratic system affordable to all.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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Permalink:

Healthcare Insurance Industry’s’ New Business Model Is Wrong.

February 29, 2012
inConsumer Driven Health Care, Healthcare Insurance Industry, Medicine: Healthcare System, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
• Leave a comment

Stanley Feld M.D.,FACP,MACE

One percent of the people spend 25% of the healthcare dollars. Twenty percent of the people spend 80% of the healthcare dollars.

It would be important to know why this is true. Then figure out what could be done about it Stakeholders need to agree on a course of action.

It would be a good idea to understand what physicians think should be done. 

“One percent of patients account for more than 25 percent of health care spending among the privately insured, according to a new study. Their medical bills average nearly $100,000 a year for multiple hospital stays, doctors’ visits, trips to emergency rooms and prescription drugs.”

The 1% and the 20% are suffering from complications of a chronic disease.

The incidence of chronic diseases is on the rise in the United States. A major precipitating factor for this is obesity.

The incidence of Type 2 Diabetes Mellitus is increasing in both adults and young children, as the incidence of obesity is increasing.

The incidence of complications of Diabetes Mellitus will increase in the future. The result will be an increase in the cost of medical care.

President Obama’s healthcare reform act will expand healthcare coverage to 32 million uninsured in 2014. Obamacare is forcing the healthcare insurance industry to change its business model in order in order to remain profitable.

Premiums are out of the reach of most businesses and individuals. Premium increases are not an option.

High-risk individuals are denied healthcare insurance coverage. High-risk patients automatically get coverage in corporate healthcare plans. The healthcare insurance industry simply raises premiums on corporate groups in order to maintain its profits.

Something must be done to decrease the increase in chronic disease and its complications. 

The government cannot afford to insure its present patient obligations much less the 32 million uninsured.

“As the new federal health care law aims to expand care and control costs, the people in the medical 1 percent are getting more attention from the nation’s health insurers.”

Twenty percent of the population not 1% should be getting the attention of the healthcare insurance industry.

“Studies have already shown that Medicare spending is concentrated on a small group of individuals who are seriously ill.

An analysis by the IMS Institute for Healthcare Informatics, the research arm of IMS Health, a health information company in Danbury, Conn., provides a rare glimpse into the medical problems of people with private health insurance that are under 65.

About three-quarters of them suffer from at least one chronic condition that could spiral out of control without proper care.”

Most of these people were obese.

The healthcare insurance industry cannot avoid these patients after 2014.

“Insurance companies will be required to enroll millions of new customers without the ability to turn them away or charge them higher premiums if they are sick. They will prosper only if they are able to coordinate care and prevent patients from reaching that top 1 percent.”

The healthcare insurance industry realizes it must fundamentally change its business model.

The healthcare insurance industry has a problem developing a new business model that would work. The industry does not want to lose control over patients, their physicians and the monies paid into the healthcare system.

The healthcare industry does not have a clue about how to actually repair the healthcare system. It is focused on its own bottom line rather than looking at business models that will be beneficial to everyone and align all the stakeholders’ incentives.

The healthcare insurance industry is planning on instituting programs that will tinker with the edges. It will not fix the problems.

The new business models will increase the percentage of money the insurance industry receives for direct patient care maintaining a Medical-Loss ratio of 15%. There is no interest in providing patients with financial incentives and a choice.

The net result will be higher costs and system failure. The weird thing is most of the healthcare insurance industry executives know it.

“The reality is if we don’t figure out how to get to the patients, we’re not going to get where they need to be,” said Dr. Lonny Reisman, the chief medical officer for Aetna.

The reality is that the system must be consumer driven with consumers in charge of their healthcare and their healthcare dollars.

At the moment patients have no incentive to decrease the cost of care. Hundreds of patients have told me that they go to the doctor to fix their illness. Medicare or their insurance pays. The patients have no idea of the costs they incur nor do they care. They have no interest in controlling their disease.

My ideal medical saving accounts would give the patients incentive to learn about their disease. They would be interested in self-managing their disease with the physician and his medical care team being the coach.

“The next challenge, say insurers, is to figure out how best to work with a person’s doctor. Because many of these patients seem to be seeing many doctors and taking many medications, there may be no one who is accountable for the patients’ overall health.” 

Physicians have figured out what services get paid by the healthcare insurance industry. They do not get paid for educating patients about their disease.

The healthcare insurance industry and the government have developed a punitive bureaucracy.   

An attempt is being made to penalize or reward physicians for medical outcomes. Pay for Performance (P4P) is a punitive payment system. It will fail. 

Patients are responsible in large part for the onset of their medical problems and in controlling their medical outcomes. Physicians cannot be responsible for patients’ outcomes. It is the responsibility of the patient.

“Insurers are also still grappling with their understanding of human nature — why some people simply don’t take care of themselves or take their medicine or go to the doctor, even when it is clear that they should.”

Patient outcomes have nothing to do with human nature. It has everything to do with financial incentive and effective education.

Spokes 5 and 6 of my future state business model has everything to do with patients’ responsibility for caring for their disease and the physicians’ responsibility to the patients. It has nothing to do with physicians’ and patients’ responsibility to the healthcare insurance industry or government.

The opinions expressed in the blog “Repairing The Healthcare System” is, mine and mine alone

Please send the blog to a friend

 

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I Left My Job: What Do I Do Now For Healthcare Insurance Coverage?

February 19, 2012
inHealthcare Insurance Industry, Medicine: Healthcare System, Patients Problems
• Leave a comment

Stanley Feld M.D.,FACP,MACE

“Dear Dr. Feld

My wife and I are 43 years old. We have a 7 year old daughter. All three of us are in excellent health. We have minimal medical bills and yearly checkups. 

I just left an executive position in a company that had excellent healthcare insurance.

 I am in the process of hunting for a new executive position. I am currently uninsured. I have the option to buy COBRA insurance for the next 18 months or until I get a job with good healthcare benefits.

The COBRA premium quoted to me to be $1600 per month or $19,200 per year. My former employer told me he was paying $15,000 for the same insurance.

I cannot afford $19,200 per year. Neither can I afford not to have healthcare insurance coverage for my family in case of catastrophic illness. I searched the Internet for the best option.

There were at least 97 healthcare insurance policies offered for individual coverage. After I got through understanding the fifth policy I was exhausted. None seemed to be a good deal.

I have been a reader of your blog and always say to myself thank God I do not have to deal with the dysfunction you describe. I could not believe I would be in this situation.

You seem to understand the problems in the healthcare system. What do I do next?

Thank you in advance for any help you can offer.

Sincerely

H”

I have received other letters of disbelief from young people. They did not appreciate how unfair, non transparent and truly dysfunctional the healthcare system was until they encountered the problems.

The future belongs to the 20 -50 year old age group not seniors. They are all consumers and potential patients. They are are going to need a viable healthcare system at some point in their life.

This age group must take an interest in developing an understanding of and take responsibility for getting involved in fixing the dysfunctional healthcare system now.

In general 20-50 year olds are not sick. Only 20% of the population is involved in dealing with the healthcare industry at one time.  Eighty percent of the population does not interact with the healthcare system. When they do they realize how dysfunctional it is.

100% of the consumers must demand, simultaneously, the healthcare system become transparent and equitable.

The structure of Present Obama’s healthcare reform plan has not yet delivered nor does it have a chance to deliver is promises. In fact, it has made the healthcare system more dysfunctional and unfair.   

Change in the system has to be consumer driven in order to force the government to reform the system so it is affordable and accessible to all. This means honestly eliminating waste at all levels.

President Obama’s waivers to favored groups and concession to vested interests political pressures will not improve the system.  

I totally understand that when dysfunction affects the other guy, young busy unaffected consumers have no interest in being involved in actively changing the system. However, they are going to be the other guy at some point.

In answer to the reader’s question “What do I do?”

He could sign up for COBRA. The COBRA system is a flawed system. It is a dishonest promise.  COBRA was accepted by congress and consumers without understanding its underlying consequences.  

“The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. “

Nothing in the Department of Labor’s document covers how the premiums are determined by the healthcare insurance industry.

A consumer electing to take COBRA is charged the calculated premium for an individual healthcare plan. The premium is very high.  

Actuarial calculation is designed to the benefit of the healthcare insurance industry. The calculation is not transparent. I suspect the government does not oversee the calculation.

COBRA is about the only option good for a 50 year old obese male with hypertension and hyperlipidemia who has a wife and a 7 year old child. He would be rejected for all private insurance plans.

The individual state’s “high risk pools’” premiums are even higher than COBRA’s premium. The high risk insurance coverage is less inclusive because it excludes any possible risk from underlying conditions.  

I felt compelled to help this reader.

He needed coverage in case of a catastrophic illness in his family until he obtained a new position. At his age and health history he should not have any trouble getting accepted for a high deductible policy.

I told him to check which insurance company his family’s physicians accept. It was UnitedHealth.

The 8th plan down the list of UnitedHealth options for high deductible was a $10,000 called Plan 100. The premium would be $318.82 a month. The deductible was $10,000. The plan provides full first dollar coverage after the $10,000 deductible is met up to 1 million dollars.

UnitedHealth Plan 100 underwritten by Golden Rule also had a $7,500 deductible for $417.

I thought this was the plan for this family. Their routine healthcare costs were less than $1000 year. The premium for the $7,500 deductible is $5004 per year. Total savings vs. COBRA is $19,200-$6004= $13,196.

If there was a catastrophic illness in his family and it cost more than $7,500 his total cost would be $7500 plus $5004 for his premium for a total cost of $12,504. He would still save $6,696 (19,200 for COBRA vs. $12,504= $6,696).

The big disadvantage is his premium costs are not tax deductible as it would be for an employer. At a 30% tax rate this consumer would have to earn $27,429 in order to pay $19,200. 

The adjudication of claims is simple. The physicians send the bill to UnitedHealth. UnitedHealth allows physicians their negotiated fee. The consumer is then sent an explanation of benefits for allowable fees.

Since the consumer has not reached the deductible, he is required to pay the physician’s allowable fee. This fee is credited toward his $7,500 deductible.

When the deductible is reached the full allowable amount for services is paid. This is the best deal under the present healthcare insurance options for this family of three.

He bought the high deductible Plus 100 insurance. He also complained about the confusing array of options and prices, the lack of transparency about these options, and difficulty in easily understanding the options.

He said he is a pretty smart fellow. He had difficulty in figuring out what to do and was ready to pay for COBRA coverage.

He asked, “How could people of average intelligence figure it out?

It would be easy if there were a questionnaire that would automatically determine consumers’ healthcare policy needs and direct them toward healthcare insurance policies that would fix their needs.

I told him the game is rigged. The insurance industry does not want you to figure out what policy is best for you. It wants you to buy the most expensive policy that might not address your needs.

The opinions expressed in the blog “Repairing The Healthcare System” is, mine and mine alone

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  • Jem • February 21, 2012

    It is consider a hard time to a people like us nowadays whereby our source of income is just a means of our jobs. Insurance is essential for our future assurance, but how to afford it if the private sector insurance premium is so huge, I think the government should step in, and to regulate the policy whereby beneficial to both insurer and the customers.

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