Affordable Health Care - The Real Problems

Sept. 8, 2008

Many politicians, including (especially?) presidential candidates, talk about providing affordable health insurance. They try to make you think that they are doing this for you. The truth is that they are doing this strictly to benefit the health insurance companies. If they really want to help you and me with affordable health care, these are the two issues they really need to address:

1) Price gouging.

If you have health insurance, your insurance company is usually charged one sixth to one tenth as much for the services than you are if you don't have health insurance. In other words, if you don't have health insurance, you pay six to ten times more than what the insurance company would pay. Not 6 to 10 percent, or even 60 to 100 percent more, but 6 to 10 TIMES more. For, example, for some recent blood work, my bill had the following charges, which are typical of all my bills:

Type of service:	Amount charged (what I would pay without health insurance)	Allowed amount (amount charged with health insurance)	Percent difference
Lipid panel	$105.75	$10.48	1009%
Assay of PSA, total	$94.00	$14.39	653%
General health panel	$182.50	$24.69	739%

How can they justify charging two incredibly different rates for the same service? Does this mean the medical facilities are significantly undercharging the health insurance companies for these services and making up the difference by vastly overcharging those with no health insurance? This looks like very fertile ground for a class action lawsuit.

This is backwards. Medical institutions have to file a lot of paperwork and frequently wait months to receive payment from health insurance plans. For someone paying cash, they have no additional paperwork and receive payment immediately (or as soon as the check or credit card clears), so this saves them lots of time, effort, and money. So, for making life so much easier for these medical institutions, they “reward” cash customers with ten times higher bills. Makes sense, doesn't it?!!?

In most states, if a gas station charged people with a certain credit card $3.60/gallon but everyone else $34/gallon, they would be prosecuted for price gouging. Many have been successfully prosecuted for charging the government a great deal more for the same services and products than what they charge commercial customers. Yet medical establishments do this price gouging all the time. And the people they are gouging are usually the ones least able to afford it.

Some may argue that people should shop around for more reasonable fees, especially those without health insurance. But frequently you are physically unable to shop around, like when you are taken to the emergency room unconscious and they have minutes to do something or you will die or lose major body functions. Even if you have a lot of time to decide, like my above blood test, most medical establishments will either refuse to give this information, make it very inconvenient for you to get this information, or simply refuse to accept you as a patient.

2) Jacking up premium payments exorbitantly if any significant service is rendered.

It is almost universal in the US that a health insurance company can't drop an existing customer because of new or previously accepted conditions. But in most places they can jack up their rates without limit. So, this is what they do in most cases to get rid people who suddenly need a lot of care, just jack up the rates so these people can't afford the insurance anymore and are forced to drop their health insurance. How is this any different than simply dropping the customer?

I have had my health insurance claims exceed my insurance premiums in any given year only once for the over twenty years that I have been an adult. The total of all the premiums I and my employer have paid over this time is at least ten times, probably much more, than the sum of all my claims over this same time. Yet, if I were to have a major medical problem in the near future, the insurance company would probably jack up my rates to where I couldn't afford them. All this previous time that they have been making lots of money off me, basically using me to pay for everyone else, is irrelevant to the insurance companies.

So the numbers you see about how many people have health insurance are meaningless and greatly exaggerate the extent of health care coverage, since many of us who pay for our own private health insurance would be forced to drop it due to the rates being exorbitantly jacked up if we filed any significant claim. For most of us, this is our greatest affordability fear. And, if we are forced to drop our insurance, the first item above, price gouging, just makes it much worse.

So, if any politician is really serious about affordable health care, they need to address these two issues. Most politicians don't even appear to recognize them. It is also in the best interest of the health care establishment and insurance companies to address these issues. Otherwise, we will rapidly find the US heading to socialized health care, which would benefit no one other than maybe politicians and bureaucrats.

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