The healthcare mess

Unless you’ve been under a rock the last few days, you probably know that the President’s State of the Union address had a proposal dealing with insurance and healthcare – basically trying to use the tax system as an incentive to generate “lower cost” insurance plans. It was on NPR, it’s been the forefront of a lot of news coverage, Barack Obama is stumping about it, as is Hillary Clinton.

Healthcare is incredibly complex. I’ve spent much of my adult life to this point avoiding anything having to do with it. I have the most basic plan that the University provides, which has the university paying all my premium. My wife stayed on her own plan because the premiums were cheaper. I do most of what I can to avoid the doctor. So I don’t even usually know the values and the limits of my own coverage. Any time I get close to it, I get frustrated. I can’t imagine what it’s like for those that are dealing with the system far more than I am.

There seem to be “bad guys” and “good guys” in all the stakeholder groups – from patients to the doctors, to the medical bureaucrats that serve the doctors, to the pharmaceutical and medical equipment industry, to the insurance industry, to the government. While I have had and continue to have my various biases against those stakeholders, it’s impossible to paint the groups with a broad brush. I can’t even begin to fathom how you unravel the gigantic interwoven mess that our system has become. There are no simple solutions. I’m rather wary of the administration’s plan because it seems largely to benefit the insurance industry and manipulating an already convoluted tax code seems to create more hassle – but maybe it starts debate, I don’t know.

Traditionally my sympathies are with the doctors. I feel like they get caught between the bureaucrats in the front office, crazy and ridiculous malpractice situations, insurance bureaucrats in both the government and private industry, and the relentless pimping from the pharmaceuticals. My sympathies are still there, though the reality is more complex than my simplified sentences could address.

But one thing I’ve seen recently I think highlights the core of the mess that is healthcare. And that is that somewhere between the doctors, the insurers, the government, the lawyers, patients with hangnails, and the lavish marketing of the med supplies corp, the reality of the costs of care have completely gone out the window. I’m not talking about hidden costs of care. I’m talking about the reality of the value printed on the page. It seems completely arbitrary.

I have had some tests recently, in one of the situations the lab sent me a bill in the multiple hundreds of dollars. They for some reason didn’t have my insurance information, and didn’t file a claim, so I got the bill and had to follow up. They did eventually file the claim.

And here’s the arbitrary. My insurer apparently negotiates pricing schedules with the healthcare vendors (labs, doctor’s offices, etc.) Most of you are probably saying “duh” because you know that already. And the claim comes back, and there’s a whole column of the “Amount you do not have to pay” And the vendors apparently agree to that. This isn’t some trivial 5-10% difference, we are talking 50%-80% price differences on bills that are multiple hundreds of dollars.

And that’s the problem I have with this whole mess. If that bill came directly to me, and I didn’t have coverage, And I didn’t feel comfortable negotiating (guess what, I don’t) and I had zero knowledge that there was even such a thing as pricing tiers – I’d be paying hundreds, thousands, maybe tens of thousands over price of what others are paying and wouldn’t be the wiser that person/group A gets price A and person/group B gets price B, based almost solely on some kind of back and forth price haggling.

Maybe those of you in sales or business are also going “duh” – that’s the way the service market works. But in my mind, that’s corrupt. There’s a price that something costs. There’s a reasonable overhead to that price. There’s a risk aspect (those that pay their bills in full and on time deserve better rates), there are expenses, there is capital, there is the right to enjoy a good life for the professionals providing the service – all in all, there’s a fair market price, a price that’s supposed to be largely constant from person to person to person from a given provider.

But what’s happening now is that it’s not fair. It seems highly discriminatory And for those that are underinsured or uninsured, and uninformed – those often least able to pay, they are getting screwed in this (or they are creating a add-on cost burden because they don’t end up paying, and drive up the costs for the next tier up)

I’d honestly love to treat insurance as I think it should be treated – as something reserved for catastrophe. My stomachaches and sprains would come completely out of a high-deductible pocket. But when the paper price difference “without insurance” is so much greater than that “with insurance” – before any money is actually changing hands – something is very, very, very wrong with our system.

That’s what has to get fixed.