Health Insurance: A Report From The Trenches

Doctor

There is a big argument going on at the moment about whether the Federal Government is going to replace the current law on health insurance with something else.  It is some high theater right now and whether Congress can come up with the votes to pass a new program (or what that program might look like) is way up in the air.

But you can read all about the legislative horse race in a zillion other forums.  My purpose here is to present a report from out here in the hinterlands about how the insurance situation has gone from bad to worse.

I have worked in small offices for pretty much my entire 30+ year career.  When I was a young attorney in the mid 1980s, I realized that my office did not pay health insurance, so I would have to buy my own.  I was a healthy 28 year old guy and knew nothing about the topic.  So, I called an insurance agent and bought an individual health insurance policy.  I still remember the cost of the premium: $67.  Per calendar quarter.  Worse, I remember griping every third month – “Oh no, here’s that miserable health insurance bill again.”

I later joined a group plan administered by my state’s Bar Association.  Premiums were rising (I was getting older, had gotten married and was starting a family) and my health insurance soon passed my monthly car payment (which had been somewhere north of $300, as I remember it.)  And then came the shocker – The notice that explained that there had been too many large claims and that there was a new plan, but one that would not cover pre-existing conditions for a year.  To stay on the old plan?  The premium had crossed the magic $1,000 per month threshold.  A threshold I was forced to step across because my family had already received approval for a significant surgery which would be a pre-existing condition under the new plan.  I sucked it up, for several months, though I’m not sure how.

Later small group plans through my office were the solution, although again the rates kept going up and up.  The demographics were bad as most of us were either getting older or had some bad health history.  And an individual policy was a no-go because the pre-existing conditions of some family members would not be covered for a period of time.  By the mid 2000s my premiums went north of $1,000 per month again.  Until that final year when they hit over $2,000 per month.  For a high-deductible plan mated to a Health Savings Account.  Every year I wondered how I could afford it and every year I somehow managed, though not always very elegantly.

It was in this environment that “Obamacare” became the law of the land.  As a Red State conservative, I was a little irked by this new entitlement, figuring that it would not be sustainable or good for healthcare in general.  But as a guy in small business with some difficult to insure family members who was about to get priced out of the insurance market, it turned out to be a Godsend and my monthly premium went down for the first time in years.

The problem has been that the situation has deteriorated each year.  In year 1 the choices were good and the cost was reasonable.  But then I had a claim.  A family member needed a replacement for an implanted medical device.  There was one source for it.  I figured that after my deductible the insurer would pay the rest.  The insurer figured it differently.  It estimated what the device would really cost if it were available from multiple sources and if it were granted a discount.  In other words, I present a claim for $X and they assume that the actual cost is 50% of $X, leaving me with the balance which, after my deductible, wound up covering more like 20% of $X .  As an insurance lawyer, I knew that I could eventually take them on and win, but took the easier route and switched companies for year 2.

Company 2 paid the claim as it should have been paid and all was well.  I was happy and stayed with them for Year 3, despite the premium increase.  But at the end of Year 3 they announced that they were pulling out of the market because they could not make money.

Year 4 (this year) found us with our third insurer in 4 years, requiring yet another panicked adjustment of “network providers”.  Some of our old ones we could keep, others we could not.  And it cost more money, of course.

We just received notice that Company 3 is also dropping out next year (as is the company from Year 1).  So each year the price goes up while the number (and quality) of insurers goes down.  It looks like I might be down to either one or two companies to choose from next year if things stay as they are, including one with the most awful online insurer reviews I have ever seen.  From what I have read, I may be one of the lucky ones.

The arguments going on in Washington are being followed by me with some interest.  But what is the choice?  It is not whether we keep the current law as it was configured four or five years ago but whether we keep the situation that we have now and will have next year.  Those two things are very much not the same thing.

If it passes, will “Trumpcare” be better than or worse than “Obamacare”?  In truth, nobody has the slightest idea.  Some will win, some will lose, and we don’t know who is in which group.

What is the answer?  I have no idea.  I do know some things, however.  We have no “crisis” in any other kind of insurance.  Car insurance, homeowners insurance, dental insurance, name it.  I know that the markets for health insurance and healthcare have been screwed up for decades.

As more and more people got insurance through their jobs and paid for every basic bit of treatment that way, health providers jacked up their prices so that they could give “discounts” to the insurers which demanded them.  And as government programs sliced reimbursement rates, medical providers just shifted those costs over to those of us in private insurance.  There is no functioning market for health care right now unless you are willing to make it a full time job researching and pre-negotiating cash prices for your treatment.  And if you do not you will be sued by a big hospital company for the full list price of your treatment, an amount which no insurer has ever been charged.

Is government-run care the answer?  I have heard enough stories about the Veterans Administration and Bureau of Indian Affairs systems to make me leery of this approach.  Medicare reimbursement rates are so low that it is getting hard to find doctors who will take new Medicare patients.  England’s National Health Service?  I have no firsthand knowledge but have heard some not very nice things.  The Canadian system gets a lot of praise these days, but I do not know much about it and those doing most of the praising are telling me how great we have it with Obamacare now.  These are usually the same folks who are either young and healthy, have health insurance through their employer, or both.  So I simply don’t know.

I do know that we are being offered an ever-increasing menu of increasingly complex and expensive health care options that are becoming harder and harder for normal people to afford.  The days of paying your doctor with a chicken or two are long gone – unless your name is Tyson.  And does anyone really want to go back to 1950’s medicine when such a thing was possible?

What about free healthcare paid by government?  My background in economics tells me that there is no such thing as “free” – demand will become almost infinite, meaning that some rationing device will become necessary in order to keep the costs from swamping the system.  And as with the case of Baby Gard in England, that rationing is not always pretty.  But don’t expect the Medical-Insurer-Government Complex to lose on whatever the eventual deal is.

What I know firsthand is that things are bad.  And they are definitely going to get worse if nothing is done.  Under the versions of Trumpcare that are under consideration?  Perhaps a different kind of worse.  Or better.  And nobody knows.  Which is the only conclusion that we can really be sure of right now.

10 thoughts on “Health Insurance: A Report From The Trenches

  1. Some very interesting and scary insight.

    As one with employer provided health insurance, the advent of ObamaCare has also had repercussions but much less dramatic than yours. Premiums have increased by healthy double digits every year to accompany stouter copays, the plan administrator has changed due to buy-outs on their end, and claims are being denied with greater frequency.

    I did learn recently the administrator isn’t looking at coding or the specific reasons for treatment before paying claims; rather, there is an algorithm that looks at you, the type of doctor, and a few other items to determine the merit of the claim. A woman I know was losing her hair due to a medication; a resultant trip to the dermatologist was denied as it was deemed to be for cosmetic reasons.

    Like you, I’m watching the health care debate with interest. I’m just not holding out high hopes that those in Washington will comprehend the outcome of their actions.

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  2. That’s a very informative perspective JP, thanks. Most of the information I get is the “Obamacare is _____” insert failing, disaster, amazing, whatever dramatic adjective so it’s interesting to get such a factual account of one family’s experience.

    I could go on at length about the Canadian system, but the best parts of single payer are:
    1 – Very little paperwork and research required. You just go to the doctor.
    2 – There’s no advertising. No billboards everywhere, no TV commercials. All that advertising is unsightly and costs money, at the end of the day who pays for it?
    Now, lest I get too smug here yes there are enormous problems such as bureaucracy, rising costs, waiting lists and dealing with the bulge of baby boomers. But hey, no advertising.

    My wife is an oncology nurse practitioner (by the way, don’t get leukemia, it’s bad no matter what country you’re in) so I do get some inside perspective on all this. The British system (insured deluxe care for people with workplace plans, basic care for everyone else) seems to have merit as being more sustainable so that may be the direction we move toward in the long term.

    But I don’t envy you with a colossal mess, and what could potentially be a complete change of direction every four years. Makes it hard to take a long view of cleaning it up.

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    • It is good to hear firsthand info on your system. The no advertising sounds pretty nice. I think the flashpoint with every system is where you have to reconcile the laws of economics with the realities of sickness and mortality.

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      • As Doug mentioned, there are lots of problems, but the system seems to work. You can wait for months to see a specialist. Sometimes you hear in the news about specialists overbilling or billing for tests not performed. I don’t think that is very common however. You may get a doctor who does not have hospital rights so cannot use the services or specialists there.

        Prescription costs are covered for me anyway, by my company’s group health insurance plan, at 90%. Once you turn 65, the Ontario government steps in to cover the bulk of Rx costs.

        I appreciated your insights Jim, I hear of many problems stateside, but this is helpful perspective for my understanding.

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  3. Pingback: Recommended reading | Down the Road

  4. As an American on the German health care system:
    Yesterday my cousin told me that she had received a $700 ambulance bill and a $1700 hospital stay bill for a Thursday-Saturday stay.
    When I had an ambulance ride here in Germany it cost me €7. A Friday to Monday hospital stay? €40.
    Health insurance costs come directly out of my paycheck. I’m not even sure how much they are – under €100 a month.
    Co-pays for medicines top out at €10. There’s no co-pay for doctor visits.
    It’s not perfect, but it’s a pretty stress-free way to do it and I say this as someone who has had a surgery each year in 2014, 15, and 16 (one elective, and my health insurance paid for that after I provided documentation).
    It breaks my heart when my relatives tell me that they can’t afford to come visit me again this year because of an unexpected hospital bill.

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    • I appreciate learning how the system works there. I am not well enough schooled on the German economy as a whole, but suspect that the higher level of social services built into the system operates as a drag on some other areas such as youth employment. But I am reaching the age where that would be a good tradeoff for me personally.
      Here, we are at a place where some big decisions need to be made. I am still convinced that a market-based system could work so long as governments and insurers are willing to pay what everyone else does, but transition from here to there would be wrenching and likely not something that our society would be willing to undertake. You certainly give something to think about on the more socialized systems.

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  5. In the past three months I’ve been in the unusual position of visiting an emergency room both in France and in the U.S. In France, an E.R. visit with a CT scan, full blood panel, and physician consult cost a grand total of $580 (and it may have been free if I’d had French health insurance). In the U.S., an E.R. visit with a chest x-ray, full blood panel and physician consult was billed at almost $7000. Why the difference? In part, I’m guessing the inflated cost in the U.S. was needed to pay for the young homeless woman who came in for treatment but didn’t have insurance. It made me realize that — one way or another — we all end up subsidizing the poor and the very ill. The French system is far from perfect, but at least there I’ve never heard my friends express concerns about being able to afford their healthcare.

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    • And then the practice has developed where insurers “negotiate” reduced rates. This results in artificially high “retail” rates for services so that providers can live with the discounts they grant. The only ones who pay full retail are the uninsured via the hospital’s collection agency. A big mess.

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