US Medical-Insurance Bureaucracy - 1/3 of Total Cost

[lpetrich]

America’s Health Care Shambles | Adam Lee

Blogger Adam Lee's wife recently had gall-bladder-removal surgery, and AL carefully checked on whether the two's insurance company will cover everything. The hospital was in-network, the surgeon was in-network, but the surgeon called an assistant who was not in-network, and who forwarded a $32,000 bill.

This led to a whole lot of haggling with the insurance company's bureaucracy.

Every time we got one of these mailings, I felt my anger building at the American health care system that permits this kind of incomprehensible stupidity. Imagine if you got married, and you paid the catering company $10,000 for the buffet at the reception – only to find out, months later, that the guy running the roast-beef carving station was an out-of-network subcontractor who didn’t agree to the fee scheme and was demanding an extra $5,000 for his work.

Surprise medical bills: how New York tackled the issue with arbitration, and won - Vox - NY has a strong law against surprise medical bills.

As part of New York’s law for handling surprise bills, the $32,000 charge went to arbitration, where it was reduced to $800 (!) – itself a demonstration of how hospital prices have no relation to reality – but the insurance company still wanted us to pay that $800, which it deemed an out-of-network charge.

The two continued their efforts until that $800 charge was revoked.

 

[lpetrich]

But why should it ever be necessary to do such a thing?

According to a study in Annals of Internal Medicine that was covered in this article from Reuters, fully one-third of healthcare costs in the U.S. – more than $800 billion each year, or around $2,500 per American – are eaten up in administrative overhead. Hospitals and insurance companies both employ armies of medical coders whose only job is to volley bills back and forth, like an outrageously expensive game of hot potato.

More than a third of U.S. healthcare costs go to bureaucracy - Reuters

It’s because the insurance companies and health care providers are engaged in a tug of war, each trying in its own way to game the system, [Dr. David] Himmelstein said. How a patient’s treatment is coded can make a huge difference in the amount insurance companies pay. For example, Himmelstein said, if a patient comes in because of heart failure and the visit is coded as an acute exacerbation of the condition, the payment is significantly higher than if the visit is simply coded as heart failure.

This upcoding of patient visits has led insurance companies to require more and more paperwork backing up each diagnosis, Himmelstein said. The result is more hours that healthcare providers need to put in to deal with billing.

“(One study) looked at how many characters were included in an average physician’s note in the U.S. and in other countries,” Himmelstein pointed out. “Notes from U.S. physicians were four times longer to meet the bureaucratic requirements of the payment system.”

noting

Health Care Administrative Costs in the United States and Canada, 2017 | Annals of Internal Medicine | American College of Physicians

Results:

U.S. insurers and providers spent $812 billion on administration, amounting to $2497 per capita (34.2% of national health expenditures) versus $551 per capita (17.0%) in Canada: $844 versus $146 on insurers' overhead; $933 versus $196 for hospital administration; $255 versus $123 for nursing home, home care, and hospice administration; and $465 versus $87 for physicians' insurance-related costs. Of the 3.2–percentage point increase in administration's share of U.S. health expenditures since 1999, 2.4 percentage points was due to growth in private insurers' overhead, mostly because of high overhead in their Medicare and Medicaid managed-care plans.

Ratios:

• Administration: 4.53
• Insurers' overhead: 5.78
• Hospital administration: 4.76
• NH, HC, hspc administration: 2.07
• Doctors' ins-rel costs: 5.34

Why a factor of 5 difference between the US and Canada?

 

[T.G.G. Moogly]

My flu shot was 85 USD, which seems high, considering how many flu shots are administered each year.

I recently received a pneumonia vaccination for which I saw no paperwork because it was done in the doctor's office. I wonder how much gets billed for that.

I can certainly believe that 1/3 of all costs are paperwork/administration. Based on my experience over the years that actually seems kinda low.

 

[Patooka]

That's fucked.

 

[prideandfall]

That's fucked.

i mean sure, but... is it really?
insurance as a concept (in every form, not just medical) is predicated on one core principle: never supplying the customer with the service they are paying for unless it is absolutely unavoidable.
it's a business model built on denying service, only simply taking money and never giving anything for it.

combine that with the generally capitalist profit motive, and i think that it's simply the expected outcome. in order to describe it as "fucked" it would need to be aberrant in some way or at least not be the only possible inevitable result of the system from which it spawned.
seems pretty much spot on to me.

 

[lpetrich]

Medicare for All’s jobs problem - POLITICO

PITTSBURGH, Pa. — Deanna Mazur, the daughter of a retired steel mill worker who works as a medical billing manager, finds some things to like about the “Medicare for All” policy that she’s been hearing politicians talk about. She likes the notion that all Americans would have health insurance. And it would simplify her own job quite a bit if there were only one place to send medical bills, instead of the web of private companies and government programs that she deals with now. “It would definitely be easier,” Mazur says.

Then again, if it were that easy, her job might not exist at all.

So it's not just more taxes, it's less jobs.

Claire Cohen, a Pittsburgh-based child psychiatrist, voted for Bernie Sanders, the architect of the most sweeping version of Medicare for All, in the 2016 Democratic presidential primary. She says the national discussion about single payer and its overwhelming focus on paying higher taxes or losing private insurance misses the point ― she argues individuals would see greater benefit from a health care system without premiums, copays and other costs that increasingly make health care out of reach. But the question about jobs, she says, is a “legitimate” issue ― one she says people haven’t completely thought through.

“You don’t want to leave all these people in the lurch without jobs,” Cohen said.

Analysis: A Health Care Overhaul Could Kill 2 Million Jobs, And That’s OK | Kaiser Health News

In 2012, Harvard economists Katherine Baicker and Amitabh Chandra warned against “treating the health care system like a (wildly inefficient) jobs program.” They were rightly worried that the health care system was the primary engine of recovery from the Great Recession. And yet the revelation that the health care sector added more jobs last year than any other in the economy was greeted by many as good news.

The Health Care Jobs Fallacy | NEJM - has "Interview with Katherine Baicker on the misguided focus on the creation of health care jobs. (05:33)"

The first casualties of a Medicare for All plan, said Dr. Kevin Schulman, a physician-economist at Stanford, would be the “intermediaries that add to cost, not quality.” For example, the armies of administrators, coders, billers and claims negotiators who make good middle-class salaries and have often spent years in school learning these skills. There would be far less need for drug and device sales representatives who ply their trade office to office and hospital to hospital in a single-payer system, or one in which prices are set at a national level.

However, this is a major source of jobs in many places. Even if the jobs are not much more than digging holes and then filling them up again.

The expense of US medical insurance has outside effects also.

The expense of paying for employees’ health care has depressed wages and entrepreneurship, he said. He described a textile manufacturer that moved more than 1,000 jobs out of the country because it couldn’t afford to pay for insurance for its workers. Such decisions have become common in recent years.

 

[Loren Pechtel]

How does this have anything to do with bureaucracy?

It's a loophole in the network system that some evil doctors are exploiting, it's not paper-pushers doing it.

It's also something I think would be easily fixed: Congress should mandate that network contracts are binding on anyone working at that facility.