The list is actually pretty long…
– A nice luxury car in cash.
– A hefty down payment on a home.
– An extravagant trip somewhere.
– A year off of work.
– A lot of stocks.
Seriously the list could go on.
Yet you’re still short for a medical procedure or in some cases a hospital stay for a bacterial infection. I recently had neck surgery and had an itemized bill of over $88,000 ranging from the room in the hospital for half a day, the procedure itself, and items such as saline solution (salt water essentially). Fortunately, I have insurance and only had to pay $3,000 for the minimally invasive procedure. I also have a good W2 job with passive income that I can afford to pay that.
That $3,000 also doesn’t count the physical therapy, the procedures I had to attempt prior to surgery, and all the other doctor appointments equating to over $5,000 over 3 years. Combined that’s an FHA down payment on a home in a friendlier interest environment.
For most $3,000 is a medical emergency that will push the majority of Americans into unrelenting debt if they’re not already there. Almost 61% of Americans in some sort of medical debt owe more than $1,000 and 71% of those owe it to hospitals.
What’s even more challenging when you’re handed a bill that is higher than the median household annual income is the fact that it’s pretty complicated to figure out how you got billed this amount, what you have to pay, and most importantly why.
The Federal Government tried to provide a little more transparency and in 2021 forced hospitals to start posting the amounts they negotiate with private insurers. Hospitals tried to fight back stating it would ‘undermine competitive negotiations,’ which realistically isn’t really a competitive free marketplace (We’ll dive into this a bit more in the next newsletter and post).
Here we are now and there are still many hospitals and organizations that have clearly ignored the requirement.
Well it’s better now isn’t it?
With new diagnosis codes, procedural codes (CPTs), and a shift towards value-based models (quality over quantity) you would think. We should see less patient confusion. With a quick Google search you can find numerous ways to understand how healthcare reimbursement works and at face value it seems self explanatory.
1) Healthcare provider negotiates rates and then performs procedures.
2) They bill multiples of the allowable amount (primarily for in-network providers)
3) Patient pays their portion (copayment, coinsurance, or deductible)
4) Patient recovers (probably not financially) and Hospital keeps on chugging.
At a high level this does make sense! A process you can follow as a patient. As you read that though there are probably some terms you’re not familiar with or don’t understand what an in-network provider is. Don’t feel bad — that’s the majority of Americans.
The health insurance situation is kind of like leftover salmon:
It’s not all bad, just needs a little work. There are a lot of benefits to having health insurance in this current environment including:
– An out-of-pocket maximum: The total amount you’ll pay no matter how much covered care you get.
– Reduced costs once you meet your deductible: Marketplace plans cover 60% to 90% of your medical expenses once you meet your deductible
– No yearly or lifetime limits: Marketplace plans can’t put dollar limits on how much they’ll spend each year.
Now, just like leftover salmon the bad part (the smell when you reheat it) is pretty bad and lasts forever. Clearly there is not a truly free competitive marketplace for insurance and as the end user we can feel that. With a lack of true competition in insurance (the pharma market is similar), there isn’t much to push cost down. Instead of universal healthcare maybe we should start taking a look at our health insurance structure first and actually allow capitalism and competition to erode healthcare costs.