Respectfully submitted by Lawrence E. Rafferty(rafflaw)-Guest Blogger
If you have had any medical procedures lately, you may already be aware of the enormous prices being charged by hospitals. What you may not be aware of is just how expensive this medical treatment is and how relying on private health care may just be reducing our lifespans. I apologize in advance on the length of the following examples, but they are necessary to understand the enormity of the issue.
“Brill’s article begins with the story of a 42-year-old Ohio man named Sean Recchi, who traveled to MD Anderson Cancer Center in Houston for treatment of non-Hodgkin’s lymphoma. He and his wife Stephanie had paid $469 a month, or about 20% of their income, for insurance that covered $2,000 per day of hospital costs. His financial troubles started when MD Anderson told him, “We don’t take that kind of discount insurance.” But he had to go to the hospital. His wife recalled that he was “sweating and shaking with chills and pains. He had a large mass in his chest that was..growing. He was panicked.”
Stephanie asked her mother to write a check for $48,900. Sean waited for 90 minutes while the hospital confirmed that the check had cleared. He was also required to advance MD Anderson $7,500 from his credit card. The total cost for the initial treatment and chemotherapy was $83,900, including a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars, $283 for an x-ray that Medicare categorizes as a $20 charge, and $1.50 for a generic version of a Tylenol pill.” CommonDreams
Those charges were just the start of the enormous costs that Mr. and Mrs. Recchi would be subjected to while dealing with his illness. His total bill for the beginning of his treatment for cancer was $83,900! If Mr. Recchi had been treated under Medicare for the same procedures and blood tests his cost would have been much less. “Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests. By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries.” Time
The hospital in this example is a non-profit division of the University of Texas, but its profits are enormous. ‘ “The hospital’s hard-nosed approach pays off. Although it is officially a nonprofit unit of the University of Texas, MD Anderson has revenue that exceeds the cost of the world-class care it provides by so much that its operating profit for the fiscal year 2010, the most recent annual report it filed with the U.S. Department of Health and Human Services, was $531 million. That’s a profit margin of 26% on revenue of $2.05 billion, an astounding result for such a service-intensive enterprise.1
The president of MD Anderson is paid like someone running a prosperous business. Ronald DePinho’s total compensation last year was $1,845,000. That does not count outside earnings derived from a much publicized waiver he received from the university that, according to the Houston Chronicle, allows him to maintain unspecified “financial ties with his three principal pharmaceutical companies.” ‘ Time
Not only is this hospital reaping huge financial windfalls on the backs of its patients and their insurance companies, the compensation of the hospital’s CEO, as noted above, is astronomical. And that compensation does not even include the “unspecified financial ties” with pharmaceutical companies. Does that mean that the CEO is allowed to receive kickbacks from some of the companies that his hospital may be using for their medications?
This is just one example, but the Time magazine article linked above delves into other examples of this type of outrageous medical costs charged to patients. If the patients noted in the examples were able to take advantage of a Medicare for all plan, the costs would be a small fraction of what Mr. Recchi was subjected to. It is interesting to note that the Administrator of Medicare for the entire country made a small fraction of what this one hospital CEO took home. “The Medicare administrator made a base salary of approximately $170,000 in 2010.” TheNation
Just what do we get in terms of service and results for these extraordinary charges? “Our private health care system has indeed failed us. We have by far the most expensive system in the developed world. The cost of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany.” Common Dreams Our expensive private health care system does not even produce better medical results than the results achieved under Medicare.
“We now have a shorter life expectancy than almost all other developed countries. A National Research Council study placed the United States LAST among 17 high-income countries.
It wasn’t always this way. Since 1960 there has been a close parallel between worsening life expectancy and increased health care costs as a percentage of GDP. Most disturbing is our growing infant mortality rate relative to other countries. A UNICEF study places the U.S. 22nd out of 24 OECD countries in “children’s health and well-being.” In startling contrast, Americans covered by Medicare INCREASED their life expectancy by 3.5 years from the 1960s to the turn of the century.” Common Dreams
That last factoid on life expectancy is amazing. We are paying far more than any other country in the world for our private health care system, but we are not getting the world-class results for those high prices. Why do we as a nation continue to allow the medical industry to charge these exorbitant rates? The answer is the lobbying money spent on our politicians in Washington and in state capitals all over this country. We have to take over the for profit health care system and replace it with a Medicare for all type system or we will continue to overpay for less. Will Obamacare help this situation? It may, but we won’t know for a few more years if costs are controlled and results are improved.
Will Obamacare start us down the road to a single payer system? One can hope, but I am not holding my breath. Does it make sense to cut Medicare services and push back the eligibility age in light of the huge national costs incurred in the private health care system? What do you think?
Bron,
IMHO, “policy limits” is immoral in the extreme. Poor people are far more likely to either go without insurance or buy the cheapest policy possible, while praying they or their family members don’t get sick. As for policy limits, try to find any private insurance carrier who does not impose some kind of policy limits.
I don’t know how I can make this any clearer. Insurance companies have whole departments devoted to fighting claims they deem excessive. Yes, they will pay for routine stuff without a fight, because it is not cost effective to fight the small stuff, and would be bad PR. Excessive is a relative term. What dollar price would you place on my youngest? If she had private insurance, two things would have happened. She would have hit policy limits very quickly.
The second thing would have been that the insurance company would have assigned a team of underwriters, lawyers and experts to go through my family history back to when I was a kid in order to find something I did not report on my application as a way to claim I “lied” when filling out the disclosure form. Our entire family would have faced financial ruin. Nobody in the family has a million or so dollars laying around they are not using.
Then a third thing would have happened. She would have died.
Because she is adopted and had been a ward of the state before we got her, she automatically was enrolled in Medicaid. Because of Medicaid, her bills were paid and she is still alive, against all odds.
As it was, when she was about 16 months old, she was still in the ICU and my wife was sitting with her. One of the pediatric residents (foreign born) was making rounds. He was very agitated and told my wife he had been reviewing the billing for the child in Accounts Receivable and demanded to know just how we were prepared to pay for her care. He picked on the wrong person. Red-headed Scots-Irish registered nurse and former Head Nurse/Nurse Manager. He never made rounds on the baby again. I assume he may have found a career reviewing insurance claims. He had the temperament for it.
Let’s boil this down to the simplest elements. Insurance companies, as they are set up now, are not about paying claims. They are about collecting premiums, and paying as few claims as possible. By doing that, they maximize the bonuses and salaries of the top executives. So, your insurance premium payments are not really to take care of you if you get really sick. The difference between what you pay and what they pay out is called “profit.” That goes to the big bosses. The more profit, the better for them, and the more motive they have for figuring out ways to deny claims and dis-enroll people who cost them more than chump change.
OS:
“The whole point of my post was that hospital is “out of network,” and it would not have mattered if he had been in an accident and came in with one arm ripped off. The insurance would have balked on paying because that medical center is “out of network.””
We deal with that all the time around here and it is a pain in the neck. But those are the rules you have to abide by if you contract with the insurance company. And they do not cut you any slack.
But if I am out of town, they cover it. My daughter had to be flown to UNC Chapel Hill when she was about 10 years old, she was visiting my brother at Cherry Point. The Marines flew her up there as a training mission, God Bless Marines everywhere.
The insurance company covered the hospital stay, I think we had to notify them within 24 hours of her arrival, which we did. And the visit was covered except for the co-pay.
OS:
If you knowingly purchase a policy which does not pay for cancer or transplants and you end up with cancer or need a transplant, I am not sure how you can then object that your insurance policy wont pay for them.
I am not sure how I am defending the indefensible? You bought the policy, you knew what it covered, you paid a lower premium and you took the risk. You made a bad choice and you lost.
Now if the person was ignorant and was taken advantage of by an unscupulous agent who lied to the person so they could not know to make an informed choice, then that is another story. The agent and the company should be dealt with harshly.
OS:
Are the claims denied because they have reached the policy limits or are the claims denied because they just dont want to pay? Or does the policy not cover catastrophic care like cancer and transplants?
It seems this is a problem of taking advantage of people on the front end. It seems to me, from what you are saying, there needs to be transparency in the insurance contract. This is what we cover, this is what we dont cover. No legal weasel words just straight forward words.
In Virginia we paid an uninsured motorist fee, why not the same for health care? It can be used only to provide for health care needs.
mahtso
Can you read? I already said it was not appropriate for the kid to go to the ER, but his grandmother was following the advice of one of the Republican candidates in the last election who said, go to the ER if you are not feeling well. Neither she nor the kid knew any better. The whole point of my post was that hospital is “out of network,” and it would not have mattered if he had been in an accident and came in with one arm ripped off. The insurance would have balked on paying because that medical center is “out of network.” If there were single payer coverage in place, that problem goes away immediately. We already have such insurance, but not everyone has access to it. It is called Medicare/Medicaid. I am in favor of access to those plans by all, and let people like Patricia Hemingway-Hall go find a real job.
Bron:
I really don’t think you understand the health insurance industry. You keep defending the indefensible. I have been watching them as both an insider and outsider for years. This is not a new game for them. In my line of work, I have been reading through mountains of discovery documents from big insurance companies, both profit and non-profit, for four decades. Denial of claims is such a big deal for company management that every insurance company I know of has a department set up for the sole purpose of denying claims. They use every imaginable loophole in the policy, often found in the fine print which even an attorney would find difficult to understand.
What is that about “chipping in?” There is already a mechanism for that. It’s called taxes-a formal mechanism to make sure everyone helps out, whether they want to or not. As we have seen with the so-called tea party movement, they don’t believe in chipping in and helping their fellow Americans. It works in every civilized country in the world except the US. Medicare and Medicaid do not have departments set up for the sole purpose of denying claims. The problem will never be solved until there is a single source for third-party payments. The only difference is the premium is paid to the government instead of a company whose primary purpose for existence is to make sure those at the top are very well taken care of, and those they claim to be serving are screwed.
Otteray Scribe
Do you believe a pulled muscle warrants a trip to the e/r? Should the single payer (i.e., taxpayers) be required to pay for services that are not medically necessary? Is a trip to the e/r medically necessary for a pulled muscle? Was the treatment your grandson received medically necessary?
eLAINE/OS:
my wife says that there are policies with a life-time limit and there are policies which do not have the life-time limit. Obviously the ones with no limit are more expensive to purchase.
How many of the people who were rejected chose to purchase policies with life-time limits thinking nothing would happen to them so why spend the extra money? And did this have anything to do with their being denied service?
I have learned one thing in my life, sh*t happens and that is what insurance is for. Dont try to save a few thousand a year on insurance premiums, do without TV or golf or eat beans and rice twice a week, get a second part time job to cover the premiums or raise your deductible to $10,000 to make the unlimited policy affordable.
If you cant afford it, then maybe we as a country should chip in the difference. In fact we ought to have a line item on our tax returns that allows us to contribute to an uninsured pool to help people who cannot afford insurance, I would gladly contribute to that fund to keep medicine free.
Bron,
My guess is that you or your kids have never needed a procedure that might run into six figures…or more. If you do, you may be in for a nasty surprise.
Based on your comments here I believe you are truly a good person who wants to see the good in everyone. Your greatest moral strength is also your greatest weakness. Your belief that people will do the right thing is naive. It leads you to believe that when there is a profit motive, managers of organizations will place the welfare of the people they serve above profit. History and research do not bear that out.
It doesn’t work that way, and several of us here have pointed that out. Given the option of amassing more money and/or power, most people choose that option. Many, if not most, wealthy people give to charity, but social psychology and sociology research shows that poor people are more likely to give money and support to others in need far more quickly than the wealthy. And in proportionally greater amounts.
I have Medicare, and never have a problem. I talked to my daughter in law last night. My grandson is a college student. He is 21 years old. He pulled a muscle in his chest and told his other grandmother his chest was hurting. She told him to go to the emergency room, so he did. Had to drive past a 24 hour walk-in clinic to get there. When anyone goes into an emergency room complaining of chest pain, you have their full attention and no one is willing to take any chances. They will run ever test known to modern medical science if it is the least bit justified.
My DiL just got the bill. That hospital is “out of network” for their insurance. The bill for a healthy 21 year old with a pulled chest muscle was $6,800, and their insurance company flatly said they were not going to pay for out of network services. His bad judgement aside, if he had single payer, such as Medicare or Medicaid, there would have been no “out of network” issues.
As for my great-nephew, he did not know those kinds of job assignments existed. I have known of it for many years. It is nothing new. They will pay smaller bills without a fight, but if you want something major, they will look through a microscope to find some way to dis-enroll you or deny your claim.
It is great to believe people will do the right thing whenever possible, but keep your hand firmly on your wallet. Given the chance, the average business executive will rob you just as quickly as if their names were Willie Sutton or Jesse James. At least Willie and Jesse were honest about being thieves and robbers.
Both my youngest daughter and grandson were treated for childhood cancer. They got the best of care. My grandson got top notch care from when he was first diagnosed at the age of 13 until he died at the age of 17. He was on Medicaid. My daughter was diagnosed with a malignant tumor at seven months. Her prognosis was grim and they gave her between five and eighteen months to live. This is not a type of cancer that is survivable except in the rarest of cases. I was told by one of the oncologists they had never had a child survive it since the hospital first started treating cancer.
Intensive treatments lasted two years She spent a total of six months in intensive care. Follow up treatments and tests went on until she was past the age of puberty. but she has survived against all imaginable odds. You could buy a luxury home in a gated community for what her treatments cost. She was eligible for Medicaid, so we paid exactly nothing. No copay. Nothing. Was she worth it? Not according to companies like Aetna and Blue Cross/Blue Shield.
Want to add up what about 180 days of pediatric intensive care costs? Remember the memo we got from one of the largest health insurance companies in the country back when I was on the Medial Ethics Committee? The letter said if an ICU stay was expected to last five or more days, the survival rate of 17% was not high enough to justify paying for it, so they would only pay for a regular room.
Bron, you mentioned you have kids. You have to ask yourself, what are they worth in a dollar amount? Never mind, I already know the answer to that. But according to people like those high level managers, they are worth no more than the price of five days in the ICU.
Bron, I am sorry for the struggles that you and your daughter have to fight but certainly can tell you are a fighter, as I would bet, is your daughter.
I used to have the best BC you could get, from when I was born and they covered anything without question.
I had to have a number of brain surgeries to try and stop the pain from my trigeminal neuralgia.
When I went on medicare they covered, and continue to cover, anything that I have done. That changed with my BC/BS a few years back. Whether it had to do with the change on my plan I do not know although the plan had been changed many years ago. Suddenly it was BC that was deciding, by pre certifying, if I could have a treatment or test.
I am now with a grandfathered plan with BC/BS that costs me more then another BC/BS plan that offers the same coverage but I am afraid to leave the grandfathered plan since it is my understanding they cannot pull the rug out for anything in it as they could if I was a plan that is currently offered.
Medicare has been wonderful, paying on time and not putting their opinion in place of the doc’s/
Claim Denied
Tricks of the Trade
How Insurance Companies Deney, Delay, Refuse and Confuse
http://www.justice.org/cps/rde/xbcr/justice/InsuranceTactics.pdf
Excerpt:
The U.S. insurance industry has trillions of dollars in assets, enjoys average profits of over $30 billion a year, and pays its CEOs more than any other industry.1 But insurance companies still engage in dirty tricks and
unethical behavior to boost their bottom line even further.
The current economic turmoil affecting the insurance industry onWall Street has only made the outlook bleaker for consumers living on Main Street. Insurance companies are likely to demand huge rate hikes and refuse more claims than ever.
Some of America’s most well-known insurance companies—the same ones that spend billions on advertising to earn your trust—have endeavored to deny claims, delay payments, confuse consumers with incomprehensible insurance-speak, and retroactively refuse anyone who may cost them money.
This report describes some of the most egregious ways the insurance industry attempts to make money at the expense of consumers. These are some of the tricks of the trade:
Denying Claims
Some of the nation’s biggest insurance companies—Allstate, AIG, and State Farm among others—have denied valid claims in an attempt to boost their bottom lines. These companies have rewarded employees who
successfully denied claims, replaced employees who would not, and when all else failed, engaged in outright fraud to avoid paying claims.
Delaying Until Death
Many insurance companies routinely delay claims, knowing full well that many policyholders will simply give up. Some have gone so far as to lock paperwork away in safes.2 Undoubtedly, the most shameful use of
delay tactics has been by long-term care insurers, who often take advantage of their policyholders’ age and ill health. In the words of one regulator, “the bottom line is that insurance companies make money when they don’t pay claims…They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.”3
Blue Cross praised employees who dropped sick policyholders, lawmaker says
Workers received high marks on performance reviews after policies were rescinded, documents show. The health insurer denies the practice is a factor in evaluations.
June 17, 2009
By Lisa Girion
http://articles.latimes.com/2009/jun/17/business/fi-rescind17
Excerpt:
Executives of three of the nation’s largest health insurers told federal lawmakers in Washington on Tuesday that they would continue canceling medical coverage for some sick policyholders, despite withering criticism from Republican and Democratic members of Congress who decried the practice as unfair and abusive.
The hearing on the controversial action known as rescission, which has left thousands of Americans burdened with costly medical bills despite paying insurance premiums, began a day after President Obama outlined his proposals for revamping the nation’s healthcare system.
An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period.
It also found that policyholders with breast cancer, lymphoma and more than 1,000 other conditions were targeted for rescission and that employees were praised in performance reviews for terminating the policies of customers with expensive illnesses.
“No one can defend, and I certainly cannot defend, the practice of canceling coverage after the fact,” said Rep. Michael C. Burgess (R-Tex.), a member of the committee. “There is no acceptable minimum to denying coverage after the fact.”
The executives — Richard A. Collins, chief executive of UnitedHealth’s Golden Rule Insurance Co.; Don Hamm, chief executive of Assurant Health and Brian Sassi, president of consumer business for WellPoint Inc., parent of Blue Cross of California — were courteous and matter-of-fact in their testimony.
But they would not commit to limiting rescissions to only policyholders who intentionally lie or commit fraud to obtain coverage, a refusal that met with dismay from legislators on both sides of the political aisle.
OS:
Which insurance company did that? My daughter has CF and I have MD and we have never once been denied anything we need, well I guess that isnt exactly true, I had to buy my own car lift. But my daughter has cost millions of dollars over the last 20 years and the insurance companies have never not paid. And we have had Aetna and Blue Cross and maybe one other.
The only time it was a problem was when the company I worked for when my daughter was born was self-insured, they fired me and we had to threaten them to pay her birth costs which were substantially more than cancer treatment or a heart transplant.
Based on my experience I am quite happy with private health care and believe that when it is government funded I will not be getting a heart if I need it and I dont believe my daughter will get lungs if she needs them. The only thing government does well is to get bigger and increase spending.
But I will say that there needs to be serious reforms of health care and insurance companies. What your nephew was forced to do is sick, I believe in profit but I dont believe in profit at any cost.
Bron,
Regarding private versus government management of third party payments for health care. My great nephew is a very bright fellow, and was hired by one of the big health insurance companies. He was assigned to a department that he did not even know existed. His job was to review insurance claims and applications for insurance…..after the insured person filed a large claim. There is some kind of algorithm that trips an audit of the sick person’s file.
He would be assigned files of patients who were costing the company too much money. His job was to review their original application for insurance, and compare that with medical histories. Think your medical history is private due to HIPAA? Think again. Your medical history can be accessed by your insurance company. What he had do was try to find discrepancies, any discrepancy, between the original application for insurance and the insured’s medical history. It is common to find things such as having two or three visits to a dermatologist for acne as a teenager, or being treated for a toenail infection, but people tend to forget those kinds of things when filling out the disclosure form. When he found such “unreported” illnesses, he was required to dis-enroll the “now too expensive” insured person. In some cases, the company would demand a refund of money already paid out for health insurance claims. No matter that bone cancer at age 45 has nothing to do with acne treatments at the age of 16.
Bear in mind, the type of person who ran up claims large enough to trigger an audit were those with cancer, needing a kidney or heart transplant, or having a chronic illness that needs ongoing expensive medications to treat. Those people lost their insurance, and no other insurance company would touch them. My sister told me of him calling her, weeping, at what his employer was asking him to do. He was looking for another job, but having trouble finding one. His distraught calls were getting closer together, when suddenly he lost his voice. Completely. Because he could not speak, he could not do his job and he was fired. Not rehabilitated, but fired. He saw a number of doctors who could find no physical explanation. He was referred for a psychiatric evaluation, and it has been determined the stress of what he was doing made him lose his voice. His mind and body finally rebelled. He has applied for disability. Not surprisingly, his former employer is fighting his disability application.
He is a young man with a conscience who was assigned a job best suited for a heartless psychopath with no conscience. He had to tell people whose children were critically ill their insurance was being cancelled because of a minor error of omission on their original disclosure form, often filled out before the child was even born.
While his big boss gets to take home twelve or thirteen million dollars a year, his supervisor is telling him, let ’em die. They are too expensive to treat.
Otteray Scribe:
I am having this conversation with my son, how much is enough. I really dont know what the answer is. I told him if you are the owner of a company you should pay your people well, that work should be fun and rewarding and part of that is to make a decent living which does more than let you live paycheck to paycheck.
I also told him that if the secretary doesnt have health care and is worrying about money, you are making too much.
I am a share the wealth guy, I just dont think government should be doing it. It is up to the individual.
What Elaine said.
I am fully in favor of a day’s pay for a day’s work. I am dead set against people making money by not earning it and scamming poor people.
mahtso,
I’m business friendly. I’m a big supporter of businesspeople/entrepreneurs who are honest, invest their own money, work hard, and take good care of their employees–people like my husband.
Otteray Scribe
If I am the business friendly commenter you refer to, yes I would work those hours for $45K if I wanted to be a doctor (although, naturally, I assume I would be at the upper end of the pay scale). The key is in wanting to be a doctor.
The MCAT, what’s that? Just kidding, but now you have convinced me, I was deluding myself: I could never become a doctor.
I cannot explain Ms. Hemingway-Hall’s situation any better than I did, other than perhaps by adding that freedom comes with the understanding that outcomes may not be ideal (or even approaching ideal). And I don’t agree that her work is more important than any doctor’s (or anyone else’s) perhaps because I don’t equate salary with intrinsic worth (or with respect as Elaine M appears to do).
Elaine M.,
What can I say, I have more confidence in people’s abilities than you do. (Maybe it’s because I know that with hard work, “I can do it,” regardless of what the “it” is, so I assume most others can as well.)
And the $45K had nothing to do with bankers etc nor w/ respect or lack thereof , but rather was in response to OS’s comment about the burdens of becoming a doctor, and more specifically to give people information that was not included in his comment.
I never wrote that $12KK was not a lot for any one (what I did write is something to effect that there was no gainsaying the fabulous salaries ). I wrote that doctors earning an average of $200k sounds like a lot, because it does sound like a lot. Are they worth that or more? I guess some are and some are not, but I don’t object to letting the (relatively) free market dictate that. If there is a single payer, my thinking is they will earn a lot less than that.
Elaine,
Microbiology washes out a lot of aspiring physicians. Wonder if our business friendly commenter would be willing to work a Resident’s hours for $45K or anywhere near that. For a Resident 18 hour days are considered short shifts. It is not unusual to see a Resident putting in 24-36 hours. Days off? Heh! Read about those in a book once, but never saw one in person. There is a reason medical students and Residents have extremely high divorce rates. And oh yes, they have classes to attend. On top of that; if they are unlucky, they may get a supervising physician with the good humor and disposition of a Marine DI.
mahtso,
Wow! $45,000! It looks like you have much more respect for business people/bankers/heads of corporations than you do for doctors. I don’t think the vast majority of people could become doctors. $200,000 is a lot of money in your mind for a doctor–but more than $12,000,000 for a CEO–not so much.