Archive for April 2011

The Inflation of Healthcare Costs   Leave a comment

Recently a family member underwent surgery. My health insurance carrier (who shall remain unnamed) sent me an Explanation of Benefits (EOB). As I reviewed the document it became obvious to me as to why health care costs are so inflated. The financial information on the EOB is as follows:

                 Submitted Amount         Negotiated or Allowed        My Deductable        Amount Remaining         Plan Pays         My Responsibility 

                         244.00                               100.62                                                                                   100.62                            80.50                  20.12

                          244.00                              100.62                                                                                   100.62                            80.50                   20.12

                          244.00                              100.62                                                                                   100.62                            80.50                    20.12

                            74.00                                 39.35                                                                                       39.35                              7.87                      7.87

                       8283.00                              1362.15                                      290.88                            1869.22                        1495.38                 664.72                 _____________________________________________________________________________________________________________

 Totals          9089.00                           1703.36                                         290.88                           2210.43                       1744.75                  732.95

 What this shows is that the total amount billed by the provider to the health insurance company for three office visits, one x-ray and the actual surgery was $9089.00. Of the amount billed $1703.36 was negotiated or allowed. I had to pay a deductible of $290.88 and the portion that was “my responsibility” which came to $732.95 for a total out of pocket for me of $1023.83. The plan payed a total of $1744.75. So the provider received a total of $2768.58 (1023.83 + 1744.75). Anyone who has no insurance would be billed the $9089.00 and would be expected to pay that full amount. Why? Because health insurance companies negotiate with healthcare providers for discounts on the “usual and customary” medical fees. For a provider to bill an uninsured party less than they bill the insurance company would be in violation of their contract. Most healthcare providers rely heavily on healthcare insurance payments as most of their patients have some kind of healthcare insurance.

Observation; if most of a providers revenue comes from insurance payments, the providers must be able to operate quite well with the discounted fees. In this case the $2768.58 out of the billed amount of $9089.00. However, in order to receive the $2768.58 they must inflate their “usual and customary” fees. This, of course, is part of the reason why the uninsured can so quickly and easily become overwhelmed with medical bills.

 We must remember that the healthcare insurance industry consumes over a third of the healthcare premium dollars that it takes in. These dollars are consumed on profit, salaries and benefits, top executive bonuses and perks, share holder returns, administrative expenses, advertising, political contributions, lobbying, etc, etc. These are healthcare dollars that otherwise could be expended by providing healthcare needs of those who are sick.

 Medicare, in contrast, consumes only about 3% of the revenues that it receives on administrative costs. The rest is expended on those who have healthcare needs. This is only one reason why we need to establish a national single-payer healthcare plan such as what Physicians for a National Health Plan (www.pnhp.org) and Mad As Hell Doctors (www.madashelldoctors.com) are proposing. With a single-payer healthcare plan, such as Medicare for All, fees would not have to be inflated, those administering the plan could negotiate with medical suppliers and the pharmaceutical industry for better prices, families would not be in fear of being bankrupt due to medical needs, and on and on and on.

 I invite everyone to educate themselves on this. There are several organizations that are working hard to promote this kind of a plan. Healthcare Now, Physicians for a National Health Plan, Mad As Hell Doctors, Americans for Healthcare are just a few. If you are on Facebook you can find these organizations as well. If you agree with this concept I would encourage you to get involved with one or more of these organizations, contact your elected officials and do all you can to help in promoting this effort.  Medicare for All…everyone in and no one out.

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Posted April 1, 2011 by terryflowersblog in Health Care